WASHINGTON (AP) — Treasury Secretary Janet Yellen on Tuesday expressed her strongest public support yet for the idea of unwinding about $300 billion in frozen assets at Russia's central bank and using them for Ukraine's long-term reconstruction.
“It is necessary and urgent that our coalition find a way to unlock the value of these immobilized assets to support Ukraine's ongoing resistance and long-term reconstruction,” Yellen said in a speech in Sao Paulo, Brazil, where a group of 20 finance ministers and central bank governors met this week.
“I believe there are strong international legal, economic and moral arguments for moving forward. “This would be a critical response to Russia’s unprecedented threat to global stability,” she said.
In retaliation for Moscow's invasion of Ukraine, the United States and its allies have frozen hundreds of billions of dollars in Russian foreign holdings. Those billions remained unused as the war continues into its third year, while officials from several countries debated the legality of sending the money to Ukraine. More than two thirds of Russia's immobilized central bank assets are in the EU.
Using the assets to support Ukraine “would make it clear that Russia cannot win by prolonging the war and would create an incentive for the country to come to the negotiating table to negotiate a just peace with Ukraine,” Yellen said.
The idea of using Russia's frozen assets has gained traction recently as continued allied funding for Ukraine becomes more uncertain and the U.S. Congress is in a stalemate over providing further support. There are trade-offs, however, as the weaponization of global finance could damage the U.S. dollar's reputation as the world's dominant currency.
Yellen said Tuesday that it was “extremely unlikely” that drawing on the frozen funds would harm the dollar's standing in the global economy, “particularly given the unique nature of the situation in which Russia is brazenly violating international norms.” There are no alternatives to the dollar, euro and yen,” said Yellen.
John Kirby, President Joe Biden's national security spokesman, said at a White House news conference on Tuesday that “we still believe that Russia must be responsible for the damage” caused to Ukraine by ” “examines the possibility of using these frozen assets”.
He said, “We still need more legislative authority from Congress” to spend the set-aside funds and “we need to have our coalition partners buy in.”
A bipartisan bill called the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act has been circulating in Washington, which would use assets confiscated from the Russian central bank and other state assets for Ukraine. Leading lawmakers had tried to move this forward to support aid to Ukraine, but it has not progressed since.
Earlier this month, the European Union passed a law setting aside windfall profits from frozen assets at the Russian central bank. Yellen calls this “an action that I fully support.”
Brazil began its presidency of the Group of 20 nations this month and finance ministers met this week. Topics discussed include poverty alleviation, climate change and the wars in Gaza and Ukraine. The heads of state and government of the G20 are scheduled to meet in Rio on November 18th and 19th for a summit.
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Associated Press reporters Josh Boak and Lisa Mascaro contributed to this report.