Russian Oligarchs

Janet Yellen Advocates Redirecting Frozen Russian Central Bank Assets to Aid Ukraine

Treasury Secretary Janet Yellen voiced her firmest endorsement yet for the proposal to liquidate approximately $300 billion in frozen assets belonging to the Russian Central Bank, advocating for their allocation towards Ukraine’s extensive rebuilding efforts.

Speaking in Sao Paulo, Brazil, amidst the gathering of Group of 20 finance ministers and central bank governors, Yellen emphasized the pressing need for action, stating, “It is imperative that our coalition devises a strategy to unlock the value of these immobilized assets, thereby bolstering Ukraine’s resilience and facilitating its long-term recovery.”

Yellen underscored the multifaceted rationale behind this initiative, citing legal, economic, and ethical grounds for its implementation. She asserted, “I am convinced that there exists a robust international mandate, supported by compelling economic and moral arguments, to proceed with this course of action. Such a measure would serve as a decisive rebuttal to Russia’s unparalleled menace to global peace and stability.”

In response to Moscow’s invasion of Ukraine, the United States and its allies took retaliatory measures by freezing hundreds of billions of dollars in Russian foreign assets. However, despite these substantial financial reserves, which have remained untouched throughout the ongoing conflict now entering its third year, there has been extensive deliberation among officials from various nations regarding the legality of redirecting these funds to Ukraine. It’s worth noting that over two-thirds of Russia’s immobilized central bank assets are situated within the European Union.

Treasury Secretary Janet Yellen emphasized that utilizing Russia’s frozen assets to aid Ukraine would send a powerful message, indicating that Russia cannot achieve victory by prolonging the conflict and would encourage it to engage in negotiations for a fair resolution. This approach has gained momentum as ongoing allied financial support for Ukraine becomes increasingly uncertain, particularly amid a deadlock in the U.S. Congress over additional assistance. However, there are potential drawbacks, as leveraging global finance in this manner could impact the U.S. dollar’s status as the predominant global currency.

Yellen reassured on Tuesday that tapping into the frozen assets would be highly unlikely to undermine the dollar’s global standing, particularly given the extraordinary circumstances where Russia is blatantly disregarding international norms. She emphasized that realistic alternatives to major currencies like the dollar, euro, and yen are scarce.

John Kirby, President Joe Biden’s national security spokesman, echoed the sentiment, stressing the importance of holding Russia accountable for the harm inflicted on Ukraine and exploring the possibility of using the immobilized assets. However, he noted the necessity of obtaining additional legislative authority from Congress to allocate these funds and emphasized the importance of securing the cooperation of coalition partners.

In Washington, bipartisan legislation known as the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act has been proposed, aiming to utilize assets seized from the Russian Central Bank and other sovereign entities to support Ukraine. Despite efforts by key lawmakers to advance this initiative as a means of providing aid to Ukraine, progress has stalled.

Recently, the European Union took action by passing legislation to earmark windfall profits generated from frozen Russian central bank assets, a move fully endorsed by Yellen.

Brazil commenced its presidency of the Group of 20 nations this month, with finance ministers convening this week. On the agenda are discussions on poverty alleviation, climate change, and conflicts in regions such as the Gaza Strip and Ukraine. G20 leaders are scheduled to convene for a summit in Rio on November 18-19.

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