Bill introduced by US senators to seize and transfer Russian assets to Ukraine

The US Senate foreign relations committee’s leading Republican has introduced a bill that would give President Joe Biden the authority to seize Russian sovereign assets and transfer them to Ukraine for the purpose of long-term reconstruction. The move comes as Congress, from both parties, is pressuring the Biden administration and its allies to find alternative funding sources for Ukraine’s reconstruction, rather than relying on western taxpayers.

The bipartisan bill, filed by Idaho Republican senator Jim Risch and Rhode Island Democrat Sheldon Whitehouse, argues that Russia is responsible for the financial burden of Ukraine’s reconstruction. It grants the president the ability to confiscate frozen Russian assets in the US, including assets held by the Russian central bank, to expedite their transfer to Ukraine. The bill also calls for the establishment of an international compensation mechanism to facilitate the funneling of seized Russian money to Ukraine.

The bill has garnered bipartisan support from the House of Representatives, where it must be approved to become law. Republican chair of the House foreign affairs committee Michael McCaul and Ohio Democrat Marcy Kaptur, co-chair of the House Ukraine caucus, are backing the legislation.

Since Russia’s invasion of Ukraine in February 2022, western countries have seized approximately $300 billion of Russian assets. This has prompted calls on Capitol Hill for the US and its allies to use this money to finance Ukraine’s long-term reconstruction, especially as discussions on funding mechanisms intensify ahead of a conference hosted by the UK later this month.

By having Russian money contribute significantly to Ukraine’s reconstruction, the financial burden on western allies would be reduced. This is crucial as concerns grow about a potential decrease in political support for additional economic aid to the country. The bill would also clarify the legal authority of the US president to take such action, making it more difficult to challenge in court.

The legislation is endorsed by notable figures such as former US Treasury secretary Lawrence Summers, former World Bank president Robert Zoellick, constitutional law professor Laurence Tribe from Harvard University, and Ukrainian-American advocacy group, Razom for Ukraine.

However, there are doubts in the US and EU about the feasibility of transferring frozen Russian assets to Ukraine for reconstruction, which has hindered the formulation of a solid plan. Nonetheless, the EU is considering options to transfer profits, including interest payments, from Russia’s seized sovereign assets to Ukraine.

The Biden administration is still considering its options regarding Russian sovereign assets and has not taken a definitive stance on the proposed legislation. Treasury secretary Janet Yellen emphasized the need for consultation with allies and partners given that most of the frozen Russian assets are located outside the US.

Concerns surrounding the confiscation and transfer of Russian sovereign assets include potential destabilization of financial markets, setting a precedent for similar actions to be utilized as a tool of foreign policy, and eliciting retaliatory responses from Moscow. Some western diplomats may also worry that directing these funds towards Ukraine’s rebuilding could eliminate Russia’s sovereign assets as a bargaining chip in future conflict settlement negotiations.

However, proponents of the bill argue that the unique nature of the war in Ukraine justifies this course of action. Senator Risch stated, “Given Russia’s brutality and continued war crimes against the Ukrainian people, it is only right that Russian government funds in the United States be seized and repurposed to help Ukraine win the war and rebuild its country.”

Additional reporting by Ian Johnston in Brussels