Bipartisan proposal would allow the US to take $5 to $8 billion in Russian assets.
Congress is preparing to provide President Joe Biden with a powerful new financial tool to empower Ukraine, a move that has the potential to reshape modern economic diplomacy.
The subject is bipartisan legislation approved by House and Senate committees that would allow the administration to seize $5 billion to $8 billion in Russian sovereign assets under US jurisdiction and use the proceeds to assist finance Ukraine's recovery. Discussions over the proposals are expected to pick up in the coming weeks as Congress works on a new Ukraine aid bill.
In a Fox News interview Sunday, Speaker Mike Johnson mentioned the Russian asset seizure suggestion as one of the options Republicans may consider in response to the Biden administration's request for additional Ukraine aid. In addition, he hinted that Republicans may try to deliver some of the Ukraine aid in the form of a loan, and that they are considering increasing US natural gas exports to "un-fund" Russia's war effort.
The next action by lawmakers to seize Russian assets is expected to set a new standard for how the United States handles future geopolitical confrontations.
"When you look at global power rivals, you have to recognize you have a military, diplomatic, and economic diplomacy that must be coordinated and effective," Rep. French Hill (R-Ark.), one of the driving forces behind the endeavor, said in an interview. "To me, this is a significant part of economic diplomacy that goes way beyond adding more names to a sanctions list that aren't going to ever be sanctioned."
While the strategy has been evolving for several months, a number of contentious topics and critical specifics remain unresolved.
Some lawmakers who want to help Ukraine are concerned that it will be viewed as a replacement for legislating greater aid, something the legislation's leaders deny.
On a worldwide scale, the general idea has also encountered some opposition in Europe, where the majority of the frozen assets at issue — approximately $200 billion — are stored. EU leaders are taking a more restricted approach, clawing back revenues on Russian assets stranded there rather than seizing them entirely. Part of the reasoning behind the US legislation is that it will assist the EU become more comfortable with the more legally, politically, and economically risky step of seizure. Amid European anxiety, the topic of whether the United States should require G7 approval to take the smaller pool of Russian assets under American jurisdiction has been a source of contention on Capitol Hill.
"It would significantly strengthen the United States' ability to seize the reserves," said David Wessel, head of Brookings' Hutchins Center on Fiscal and Monetary Policy. "That's important because even though there are not a lot of reserves in the U.S. — they're mostly in Europe — it would give the U.S. more backbone to push the Europeans to do more."
Hill has played an active role in the law as a member of House Foreign Affairs, which authorized it, and House Financial Services, which has distinct jurisdiction over economic sanctions. Hill is a former banker, Treasury Department officer, and Senate staffer.
While he supports the original House bill, called as the REPO for Ukrainians Act, Hill also wants to broaden the scope of potential monies that may be confiscated and how they could be used. For example, he wants the legislation to extend beyond Russian sovereign assets and include state-owned corporations. He has attempted to rouse Europe behind the confiscation plan, including in a joint Wall Street Journal op-ed with Albanian MP Lulzim Basha. He stated in a separate essay with former Speaker Newt Gingrich last month that the United States "cannot wait for G7 approval to lead or act."
"You had a sovereign country invade another sovereign country using the most brutal warfare possible," Hill went on to say. "This is not a civil war." It is an invasion by a P5 member of the United Nations, which violates every international law we know. As a result, when a peace agreement is reached, Russia owes some type of restitution to its sovereign neighbor. This is a wonderful method to set up a fund for Ukraine's rehabilitation after peace."
The Biden administration has also warmed to the concept. A representative for the White House National Security Council stated that the administration supports the goals of the "robust bipartisan REPO for Ukrainians Act introduced in the Senate." The administration is also actively communicating with friends and partners, including the G7, "to ensure we are all coordinated in making Russia pay."
