Senators on Thursday welcomed the news that leaders of the Group of Seven wealthy democracies have agreed to back using the interest earned from frozen Russian state assets as collateral for a large new loan to Ukraine.
Specifics of the leaders’ agreement reached at the G7 summit in Italy are still coming out, but reports say it involves using the windfall profits from roughly $280 billion in Russian sovereign assets held in Western financial institutions to back a $50 billion loan to the Ukrainian government.
“I think that there’s a certain amount of symmetry in using Russian assets to try and recover from the Russian damage that’s been [done],” said Sen. Thom Tillis, R-N.C., who co-chairs the U.S. Senate NATO Observer Group. “Hopefully, we can mobilize it and get broad support outside of the G7.”
Lawmakers were early proponents for seizing and transferring to Kyiv the Russian currency reserves that were frozen by the U.S. and its allies in early 2022 in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine. But while Congress wants to see the entirety of the frozen assets tapped for Ukraine’s economic and humanitarian benefit, only a small fraction of the immobilized reserves is held in U.S. financial institutions.
The vast majority of the reserves — including nearly $200 billion held in Belgium— are frozen in Western Europe, where political and financial leaders have been leery about the legal and global reputational consequences for their banking sectors if they seized and liquidated the sovereign assets of a foreign government they are not at war with.
That hesitancy has meant the Biden administration and like-minded members of Congress have had to move slowly and gradually in gaining European buy-in for using any portion of the frozen Russian reserves to support Ukraine.
“The Europeans are getting on board,” Senate Foreign Relations ranking member Jim Risch said in a Thursday interview. “They have been working on some novel ways to do this, and we’re cooperating with them…. Frankly, I’m not hung up on process. We just want to get the job done.”
Risch said he has had multiple meetings and conversations with European leaders and diplomats on the matter.
The Idaho Republican authored a provision in the recently enacted national security supplemental that authorizes President Joe Biden to confiscate the roughly $5 billion in frozen Russian reserves held in the U.S. and transfer it to an international fund for Ukraine’s reconstruction and economic benefit.
Treasury Secretary Janet L. Yellen in a Thursday op-ed in The New York Times outlined the broad terms of the U.S. proposal to the G7. The plan involves using several billion dollars in annual profits earned from the frozen Russian reserves in the Belgian clearinghouse Euroclear, which the European Union has already endorsed directing to Ukraine, as the basis for a loan to Ukraine.
“We propose a loan that would get Ukraine a decisive amount of funding,” Yellen wrote. “The loan would be paid off by the earnings over time. The funds this loan would provide would equip Ukraine with the resources it needs to defend itself and to rebuild — paid for by the proceeds earned from Mr. Putin’s own assets.”
Though the final goal of Ukraine, and some Eastern European countries, including Poland, is to see all the frozen Russian assets transferred to Kyiv, there was a sense of relief on Capitol Hill that there’s at last progress on the issue.
“What we said is ‘Can we use these seized assets to help Ukraine?’ and they’re doing exactly that and keeping it available for ultimate distribution. So, I think that’s a very positive step,” Senate Foreign Relations Chairman Benjamin L. Cardin, D-Md. told reporters. “Knowing the politics of Europe and knowing that we are a minor player in regard to the amount of [frozen Russian] assets that we have, it was much more important to leverage what Europe does. And I think we had some major impact to get Europe to do this.”
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