Use Frozen Russian Assets to Aid Ukraine – Yellen

U.S. Treasury Secretary Janet Yellen has publicly endorsed the idea of liquidating approximately $300 billion in frozen Russian Central Bank assets to support Ukraine’s reconstruction efforts. Yellen’s remarks came during the ongoing Group of 20 finance ministers and central bank governors meeting in Sao Paulo, Brazil, where she emphasised the urgent need for international action in response to Russia’s destabilising invasion of Ukraine.

Yellen asserted, “It is necessary and urgent for our coalition to find a way to unlock the value of these immobilised assets to support Ukraine’s continued resistance and long-term reconstruction.” She highlighted the strong legal, economic, and moral rationale behind such a move, characterising it as a decisive response to Russia’s unprecedented threat to global stability.

Since the onset of the conflict, the United States and its allies have frozen substantial amounts of Russian foreign holdings as a punitive measure against Moscow’s aggression. However, these funds have remained untapped amid ongoing deliberations regarding their potential allocation to Ukraine. Notably, a significant portion of Russia’s immobilised central bank assets are situated within the European Union.

Yellen emphasised that utilising these assets for Ukraine’s benefit would send a clear message to Russia that prolonging the war is futile and underscore the imperative for constructive dialogue towards achieving a just peace. However, she acknowledged the potential ramifications, including concerns over the weaponisation of global finance and its impact on the U.S. dollar’s status as the world’s preeminent currency.

Addressing these concerns, Yellen reassured that tapping into the frozen funds would not significantly undermine the dollar’s standing, particularly in light of Russia’s blatant disregard for international norms. She stressed the lack of viable alternatives to major currencies like the dollar, euro, and yen in the current geopolitical landscape.

John Kirby, President Joe Biden’s national security spokesman, echoed Yellen’s sentiments, emphasising the need for Russia to be held accountable for the damage inflicted on Ukraine. Kirby underscored the importance of securing additional legislative authority from Congress to access the immobilised funds and emphasised the necessity of coalition partners’ support.

Efforts to advance bipartisan legislation, such as the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, which proposes using confiscated assets for Ukraine’s benefit, have faced challenges in Congress. Despite this, Yellen expressed support for measures taken by the European Union, including the recent law to allocate windfall profits from frozen Russian central bank assets.

As Brazil assumes the presidency of the Group of 20 nations, discussions at the ongoing finance ministers meeting encompass critical global issues, including poverty alleviation, climate change, and ongoing conflicts such as those in the Gaza Strip and Ukraine. With a summit slated for November, the international community faces a pivotal juncture in addressing these pressing challenges and charting a path towards sustainable peace and prosperity.