STRESA, Italy — The Senate’s top proponents of a law allowing U.S. authorities to use Russian sovereign assets to aid Ukraine are backing Treasury Secretary Janet Yellen’s approach to the policy at the G7 Finance summit, even if it’s not quite what they envisioned.
The REPO Act, enacted in late April, gives the United States sweeping authority to seize Russia’s sovereign assets and use them to pay for Ukraine’s reconstruction. U.S. officials need to get European leaders on board to make the regime effective, and that’s a top focus for Yellen going into today’s G7 conference.
Instead of asset seizure, Treasury officials have been pushing their international counterparts to embrace a plan that securitizes the forward interest earnings of those assets, which could help back a loan to Ukraine worth tens of billions.
There are between $200 billion and $300 billion in Russian assets frozen inside the European banking sector. And while the European Union’s member states approved a plan Tuesday that would allow the bloc to embrace Yellen’s approach, the real goal is a joint agreement from the G7.
Congress is watching: For now, REPO’s top backers in the Senate are comfortable with Yellen’s approach.
Senate Foreign Relations Committee Chair Ben Cardin (D-Md.) said in an interview Tuesday that coordination with Europe has always been a crucial element, whatever form the effort takes.
“We made that pretty clear with the language we put in the bill — that we need to leverage United States leadership with action from those who have the most assets, which is Europe,” Cardin said.
The committee’s top Republican, Sen. Jim Risch of Idaho, said he appreciated Treasury’s creativity to date.
“They’ve come up with some innovative ideas, which I support,” Risch said. “And so I think it’s all positive.”
Secretary of State Antony Blinken has also thrown his weight behind the approach, telling the Foreign Relations Committee Tuesday that officials are “looking at ways to collateralize the principal and to use that as the basis for a loan, for a bond — that’ll create a lot more resources for Ukraine up front.”
Risch isn’t surprised by the resistance Europeans have shown to outright seizure so far, and he seems to think they’ll come around to more ambitious plans involving Russia’s sovereign assets.
Other Republicans, including Sen. Lindsey Graham (R-S.C.), are feeling a bit less patient.
“This is a golden opportunity to open up another front against Russia,” Graham said. “The Europeans are OK with interest on the account, but I want to go after the principal.”
Trump factor: A quiet undercurrent of this G7 finance summit — like almost everything else the Biden administration does overseas — is what happens to U.S. engagement abroad if former President Donald Trump returns to power next January.
As Treasury rallies G7 leaders around the interest securitization idea, there is plenty of lingering concern about what a second Trump administration could do to undercut that effort or future attempts to back Ukraine.
Is it possible to structure this plan in a way that Trump-proofs it? Lawmakers aren’t counting on it.
“We’ve done things out of concern as to how a president like President Trump can act. I am concerned about that. But I don’t know if we can do that with REPO,” Cardin said.
“There are some things you can do,” Cardin added, “but the bottom line is that Congress can’t be the president.”
— Brendan Pedersen in Stresa and Andrew Desiderio in Washington
