Treasury Secretary Janet Yellen Supports Liquidating Frozen Russian Assets for Ukraine’s Reconstruction
In a powerful statement of support, Treasury Secretary Janet Yellen has advocated for the liquidation of approximately $300 billion in frozen Russian Central Bank assets to aid in Ukraine’s long-term reconstruction efforts. Yellen made her remarks during a meeting of Group of 20 finance ministers and central bank governors in Sao Paulo, Brazil. She emphasized the necessity and urgency of unlocking the value of these immobilized assets to bolster Ukraine’s resistance and facilitate its recovery.
Yellen asserted that there is a strong case, both legally and morally, for moving forward with this proposal. She argued that it would serve as a decisive response to Russia’s destabilizing actions, which pose an unprecedented threat to global stability. The United States and its allies froze these Russian assets in retaliation for Moscow’s invasion of Ukraine. However, the funds have remained untapped for years as officials from various countries debated the legality of redirecting them to Ukraine. Notably, over two-thirds of Russia’s immobilized central bank funds are located in the European Union.
Utilizing these assets to assist Ukraine would send a clear message that Russia cannot achieve victory by prolonging the war. It would incentivize Russia to come to the negotiation table and seek a just peace with Ukraine. As allied funding for Ukraine becomes increasingly uncertain and the U.S. Congress remains deadlocked on providing further support, the idea of using Russia’s frozen assets has gained traction.
Nevertheless, there are tradeoffs to consider. Weaponizing global finance could potentially harm the U.S. dollar’s status as the world’s dominant currency. Yellen addressed this concern by stating that tapping into the frozen funds is “extremely unlikely” to undermine the dollar’s standing, particularly given the unique circumstances involving Russia’s brazen violation of international norms. She emphasized that there are no viable alternatives to the dollar, euro, and yen.
John Kirby, President Joe Biden’s national security spokesman, echoed Yellen’s sentiments during a White House press briefing. He emphasized the need for Russia to take responsibility for the damage inflicted upon Ukraine and expressed support for exploring the option of utilizing the frozen assets. However, Kirby noted that additional legislative authorities from Congress are required to access these funds, and coalition partners must also be on board.
In Washington, bipartisan legislation known as the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act has been circulating. This bill aims to utilize confiscated assets from the Russian Central Bank and other sovereign entities to provide aid to Ukraine. While leading lawmakers initially championed this legislation, it has since stalled and made no progress.
The European Union recently passed a law that sets aside windfall profits generated from frozen Russian central bank assets. Yellen expressed her full endorsement of this action, highlighting the importance of international cooperation in addressing the crisis.
The G20 finance ministers’ meeting in Brazil marks the beginning of the country’s presidency of the Group of 20 nations. The agenda for this meeting includes discussions on poverty alleviation, climate change, and ongoing conflicts in the Gaza Strip and Ukraine. The G20 leaders are scheduled to convene for a summit in Rio on November 18-19.
As the debate surrounding the use of frozen Russian assets intensifies, it remains to be seen how this issue will be resolved. The fate of Ukraine’s long-term reconstruction efforts hangs in the balance, with the potential to reshape the geopolitical landscape and redefine global financial dynamics.
