President Joe Biden’s signing of a significant aid package for Ukraine and allied nations on Wednesday includes provisions allowing the U.S. to seize Russian state assets located within its borders for the benefit of Ukraine. Under the REPO Act, integrated into the aid bill, these assets could potentially contribute an additional $5 billion in assistance to Ukraine, sourced from Russian Central Bank holdings frozen in the U.S.
The U.S. law mandates the president and the Treasury Department to identify Russian assets within U.S. jurisdictions within 90 days and report to Congress within 180 days. Following this period, the president may take action to seize these assets.
The legislation emphasizes international cooperation, indicating that any confiscation and repurposing of Russian assets should involve allied nations. Treasury Secretary Janet Yellen has underscored the importance of collective action with G7 partners.
In Europe, discussions about seizing Russian assets are ongoing. While the EU has begun earmarking interest from frozen Russian central bank assets, concerns persist among European leaders about potential repercussions and the impact on the international legal framework. European Central Bank President Christine Lagarde has cautioned against hasty actions that could destabilize the global financial system.
Critics of the REPO Act argue that weaponizing finance against Russia could undermine the U.S. dollar’s status as the dominant global currency. Concerns also arise about potential reactions from major holders of U.S. Treasuries, such as China, and the broader implications for the global economy. Russian authorities have warned of the destabilizing effects of the new law on the international financial system.
As discussions unfold, the decision to seize Russian assets remains contingent upon international consensus and careful consideration of the potential risks and consequences for global finance and geopolitical stability.