White House Throws Support Behind Seizing Frozen Russian Assets
https://www.bnnbloomberg.ca/white-house-throws-support-behind-seizing-frozen-russian-assets-1.2020405"President Joe Biden’s administration is backing legislation that would let it seize some of $300 billion in frozen Russian assets to help pay for reconstruction of Ukraine, a shift as the White House seeks to rally support in Congress to further fund the war against Vladimir Putin’s forces.
The administration welcomes “in principle” a bill that would allow it to confiscate the funds, according to a November memo from the National Security Council to the Senate Foreign Relations Committee.
“The bill would provide the authority needed for the executive branch to seize Russian sovereign assets for the benefit of Ukraine,” the NSC said in the memo, one of three such communications seen by Bloomberg News.
... Global Response
“At the end of the day, the rest of the world is going to make a judgment about whether this is a legitimate use of US governmental authority,” said Benn Steil, the director of international economics at the Council on Foreign Relations. “Overwhelmingly it’s going to be rejected by countries who represent a majority of the world’s population. Including countries we are trying to move closer to in many areas.”
Administration officials, including Treasury Secretary Janet Yellen, have said in the past that current US law doesn’t allow seizure of the sovereign assets, which were frozen after Russia’s February 2022 invasion of Ukraine. While the White House wasn’t seeking such authority from Congress as recently as this summer, its position began to shift as it became clear that Republicans were hesitant to approve more taxpayer funds for Kyiv, according to a person familiar with the situation.
... According to the memos viewed by Bloomberg, the White House was initially ambivalent about inserting a G-7 approval requirement but has since emphasized the need to move in concert with allies.
Such a requirement “would make it more likely that Europe (where the vast majority of assets are located) will be willing to take this step, given their concerns that taking this action in the Russia context could increase the likelihood that we seize assets in other cases where the legal and policy justification is less strong,” the NSC said in one of its memos.
“It also reduces the risk that this step undermines faith in the United States as a destination for foreign investment,” it said.
With only about $4 billion to $5 billion of Russia’s assets in the US, it wouldn’t make sense for the US to act in isolation and risk sparking a flight from the dollar over a symbolic amount of money, according to a congressional aide with knowledge of the debate over the provisions.
The International Monetary Fund on Thursday said it’s monitoring the situation, and would assess the impact of any seizure or windfall taxes on the global monetary system and individual member countries.
“Any assessment that we would make would depend, of course, on the precise details of any actions that are taken,” IMF spokeswoman Julie Kozack said in a briefing."
