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U.S. and partners in urgent talk over Russian assets use for Ukraine, NYT reports

U.S. and partners in urgent talk over Russian assets use for Ukraine, NYT reports Vladimir Putin (Photo: Getty Images)
Author: Daria Shekina

The United States, along with European partners, are considering using frozen Russian assets to aid Ukraine in military actions, according to NYT.

According to the material, the U.S. presidential administration is currently signaling support for the arrest of over $300 billion in Russian assets hidden in Western countries. Specifically, the U.S. has initiated discussions with allies regarding the use of these funds to aid Ukraine in the war when financial support diminishes.

It's worth noting that U.S. Treasury Secretary Janet Yellen stated that the confiscation of these funds without Congress's decision "was not something that is legally permissible in the United States."

However, some high-ranking U.S. officials believe that after the decision to confiscate and transfer Russian assets to Ukraine, allied countries might not want to keep their funds in the New York Federal Reserve System or dollars.

Where will the funds go?

Nevertheless, the U.S., along with other G7 countries, has begun reviewing how existing powers can be used, or whether they should turn to Congress to decide on the use of funds.

According to the NYT, Biden has not yet signed a strategy on how exactly the Russian assets will be used - whether they will be directly transferred to Ukraine or used for its benefit in another way.

Partners are considering obstacles to using the funds. Specifically, discussions involve whether the money can only be used for reconstruction and budgetary purposes to support Ukraine's economy or if it can be spent directly on military efforts.

One of Biden's administration representatives noted that even if Congress eventually reaches an agreement to pay for additional weaponry for Ukraine and aid its government, the decreasing support for military efforts among Republicans and the increasingly unstable military position of Ukraine indicate that an alternative funding source would be extremely necessary.

Negotiations on the use of assets

If the U.S. and other countries negotiate the transfer of Russian assets to Ukraine, it would be unprecedented. Such an action could have unforeseen legal and economic consequences, leading to lawsuits and retaliation from Russia.

However, in the U.S., there is hardly any public discussion about the progress of talks regarding the confiscation of Russian assets.

A small portion of Russian assets is in the U.S. However, the majority of Russian deposits are in Europe, including Switzerland and Belgium, which are not part of the G7. This is why diplomatic negotiations are ongoing on how to access these funds, some of which are in euros and other currencies.

A G7 representative stated that the coalition had explored various options for using the assets to propose a unified plan around the second anniversary of Russia's war against Ukraine. Officials plan to convene in Germany at the Munich Security Conference.

The initial discussions focused on what would be permissible under international law and the domestic legislation of each country, as they considered a possible legal response from Russia and corresponding measures.

Use of frozen Russian assets

European and American officials are exploring means of retrieving income from Russian assets frozen after the start of Russia's widespread invasion.

Our country, along with international partners, is working on creating a mechanism to confiscate assets of the terrorist country. The funds could be directed toward the recovery of our state. This amounts to almost $500 billion.

The Financial Times reported that in the meantime, G7 countries had come close to confiscating Russian assets for their transfer to Ukraine.