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Yellen says Russian assets are no substitute for Ukraine aid

Tan KW
Publish date: Fri, 01 Mar 2024, 11:29 PM
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Treasury Secretary Janet Yellen said any plan to seize or monetise some US$282 billion in frozen Russian assets to help Ukraine cannot be viewed as a replacement for urgently needed assistance for the embattled country that’s been held up in Congress.

“I don’t see a real substitute for Congress providing Ukraine the aid it needs this year,” Yellen said in an interview on Thursday in Sao Paulo. “I don’t think anyone can fill that gap.”

With the war now in its third year and the Russian offensive showing no sign of abating, Ukraine’s financing needs remain high, and the US and its allies are looking to reassure the war-torn nation they remain committed in helping it in its fight.

While the European Union has offered Ukraine “very meaningful financing,” and Japan has also contributed, “the total just doesn’t seem like enough,” Yellen said. Those funds can help the country manage in the near term while Kyiv awaits more comprehensive assistance, she indicated.

More than US$60 billion of proposed US emergency aid to Ukraine has been stuck for months in Congress, as Republican leaders seek to force President Joe Biden’s hand on immigration policy. Yellen warned that without the assistance, Ukraine may face severe shortfalls. House Speaker Mike Johnson showed no sign he’d drop his demands for border-policy changes in exchange for Ukraine aid, after a one-on-one meeting with Biden on Tuesday.

US lawmakers on Thursday approved a temporary spending measure to avoid a government shutdown this weekend, and sent the bill to Biden for his signature. It did not include funding for Ukraine.

With Russia on the front foot militarily, and further aid from the US in question, there’s a growing willingness to consider what once were viewed as high-risk moves, including seizing, or somehow unlocking value out of US$282 billion in frozen Russian assets.

“This could be something that could help longer term,” Yellen said in the interview. Earlier this week, she said the legal and moral case is strong - seeking to assuage European doubts. She met with Group of Seven (G7) counterparts in Sao Paulo, where the broader Group of 20 emerging and developed nations also gathered.

While G7 members agree those funds should remain off-limits from Russia unless it pledges to help with Ukraine’s reconstruction, they’re at odds over whether it’s lawful to seize the assets outright - and over how they could potentially squeeze value out without depleting them.

Biden wants the G7 to make progress on plans to tap frozen Russian sovereign assets by the time the leaders meet in June, Bloomberg reported Thursday.

France and Germany, along with the European Central Bank, have expressed concern about retaliation by Russia against European assets there, and about the impact on financial stability and the euro’s status as a reserve currency - especially as more than two thirds of the assets in question are in Europe.

Yellen acknowledged the European concerns, but said her counterparts are open to working with the US.

“Hearing that we think there’s a good international justification, that we can look for alternatives to try to mitigate the various risks, they’re certainly willing to work with us,” she said.

G7 officials and lawyers are examining a range of options they can offer to national leaders at their June meeting in Italy, since any move will ultimately require a political decision at the highest level.

 


  - Bloomberg

 

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