US to Give Frozen Russian Assets to Ukraine... 'Reconstruction Support Act Passed'

A bill to support Ukraine using Russia's frozen assets in the United States passed the U.S. Senate Foreign Relations Committee on the 24th (local time).

The bill centers on confiscating Russian assets in the U.S., including those of the Russian Central Bank, to use as funds for Ukraine's reconstruction. Furthermore, it instructs the president to encourage the European Union (EU) and allied countries to participate as well.

As part of sanctions against Russia's invasion of Ukraine in 2022, the U.S. seized 4.6 billion euros of Russian assets. According to a document from the European Commission, the EU has also frozen 210 billion euros, with France and Germany freezing 19 billion euros and 210 million euros of Russian assets, respectively.

Central Bank of the Russian Federation
[Image source=Central Banking]

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Jim Risch, the bill's sponsor and a member of the U.S. Senate Foreign Relations Committee, stated, "Russia has illegally invaded Ukraine without justification and committed unspeakable crimes over two years," adding, "Russia must pay reparations for Ukraine's reconstruction."

Senate Foreign Relations Committee Chairman Ben Cardin emphasized the importance of other countries joining in, saying, "Currently, about $300 billion worth of Russian government assets are frozen worldwide, with $5 billion of that in the U.S." He added that if the U.S. confiscates central bank assets of a country not at war with it, it would be the first such case and constitute an 'economic nuclear option.'

Some voices have expressed concerns about the Ukraine Reconstruction Support Act. They argue that confiscating Russian Central Bank assets protected under international law could accelerate de-dollarization by countries hostile to the U.S. This could threaten the dollar's status as the global reserve currency and cause significant repercussions for the dollar-centered global financial system.

Currently, G7 countries have agreed to freeze Russian assets but have not reached consensus on confiscating them to support Ukraine.

U.S. Treasury Secretary Janet Yellen said on the 8th, "The key is whether G7 leaders can agree on an international legal basis to seize Russian assets," adding, "Nothing has been finalized yet."

Meanwhile, the bill passed by the standing committee will be scheduled and sent to the full chamber. After joint committee deliberations between the Senate and the House to reconcile differences, it will be finalized with the president's signature.

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