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Congress passes bill that could unlock billions in frozen Russian assets for Ukraine

More than $6 billion of the $300 billion in frozen Russian assets are sitting in U.S. banks.
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The House passed a foreign aid package Saturday as well as what's called the REPO Act, which would allow the Biden administration to confiscate billions of dollars’ worth of Russian assets sitting in U.S. banks and transfer them to Ukraine for reconstruction.

“By delivering urgently needed aid to Ukraine, the United States has reasserted itself as the leader of the free world and as a reliable partner to its allies," Rep. Ritchie Torres, D-N.Y., said on social media.  "The US has a singular obligation to help freedom fighters fight for their freedom, and nowhere more so than in Ukraine, whose self-defense against Putin’s aggression must prevail."

The REPO Act, which would authorize Biden to confiscate the frozen Russian assets in U.S. banks and transfer them to a special fund for Ukraine, is part of the foreign aid package that was stalled for months in the House. More than $6 billion of the $300 billion in frozen Russian assets are sitting in U.S. banks. Most of the $300 billion in assets are in Germany, France and Belgium.

On Wednesday, House Speaker Mike Johnson, R-La., released the package that would include tens of billions of dollars in aid for Ukraine, Israel and Taiwan. 

“I’m going to a allow an opportunity for every single member of the House to vote their conscience and their will on this,” Johnson told reporters, defending his decision to allow the vote to go forward Saturday.

Russian President Vladimir Putin and his government invested heavily in the euro and the dollar over the years to keep the ruble stable, planting $300 billion worth of foreign currency reserves. 

But in early 2022, following Putin’s invasion of Ukraine, all of the Group of Seven countries — the U.S., U.K., Canada, France, Germany, Italy and Japan — banded together and froze all of the $300 billion of Russian foreign currency reserves held in banks in those countries, most of it in Europe.

“The Russians were surprised when, right after the war started, the Europeans took the exact same measures as the United States, freezing all of the reserves that were there, and the Japanese did the same, which is why most of Russia’s reserves today are frozen in Western banks,” said Chris Miller, a professor at the Fletcher School of global affairs at Tufts University.

The idea to confiscate the Russian assets, which emerged last year, has been hotly contested by economists and foreign policy experts.

In a recent op-ed in The New York Times, contributing opinion writer Christopher Caldwell argued that it’s a “terrible idea” to confiscate the Russian funds because other countries might stop investing in the U.S., which could negatively affect the economy in the long run.

“This could weaken the dollar’s status as the main global reserve currency. The dollar is probably the most valuable strategic asset the United States has,” Caldwell argued.

Michael McFaul, the former U.S. ambassador to Russia who has been lobbying for the REPO Act for months, clapped back at Caldwell’s assertion and said the use of Russian assets for Ukraine would send an important message to autocratic nations around the world.  

“There are those that say, 'Well, this will hurt the dollar. It’s bad for our reputation.' I have a pushback to that. I don’t want criminals investing in American Treasury bonds,” McFaul said.

One of the diplomatic challenges would be to persuade the other G7 countries to do the same. While the U.K. is on board with the idea, France and Germany have been reluctant. 

“We’re making good progress in how to access that funds on an agreed basis that I think we can take forward to the G7,” U.K. Foreign Minister David Cameron told reporters April 9.

Amid the diplomatic maneuverings, one group in the background has been persistently applying pressure on members of Congress, the White House and G7 countries to move forward with the idea of confiscating the funds.

The Renew Democracy Initiative, a Washington D.C.-based nonprofit organization promoting democracy and American interest overseas, sent a letter Friday urging Johnson and House Minority Leader Hakeem Jeffries, D-N.Y., to work together to get the REPO Act passed. 

“Your leadership through legislative action will increase the likelihood that the administration does what is necessary to confiscate Putin’s billions,” wrote Chairman Garry Kasparov and CEO Uriel Epshtein.

In an interview Friday, Epshtein said he believes it will take U.S. action to bring about a G7 collaboration to confiscate the funds.

“Other G7 countries will only act to confiscate Russian assets if the U.S. leads,” he Epshtein.