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This G7 meeting will be a crucial time for Yellen to rally Western leaders behind a plan to use Russia’s frozen global assets to pay for Ukrainian aid.

What Yellen needs from G7

FRANKFURT, GERMANY — Treasury Secretary Janet Yellen has a full week ahead of her in Europe.

The G7 finance ministers’ conference kicks off in Stresa, Italy, as top economic officials from around the world will stream into a tiny beach town just south of the Swiss border.

There’s a lot on the docket, as we wrote in The Sunday Vault. But even before then, Yellen is slated to give a major address on our transatlantic alliance with Europe on Tuesday at the European Central Bank. We’ll be traveling with the Treasury secretary all week.

But for many on Capitol Hill, the main event will be about Ukraine and a piece of legislation Congress managed to pass earlier this year — the REPO Act. This G7 meeting will be a crucial opportunity for Yellen to rally heretofore hesitant E.U. leaders behind some kind of plan to use Russia’s frozen global assets to pay for Ukrainian aid.

The REPO Act gave U.S. authorities a first-of-its-kind power to seize Russian sovereign assets to cover the cost of Ukrainian aid. But the United States needs Europe’s help to make the regime an effective one because the European banking system is where the vast majority of Russia’s global assets currently sit.

For now, Yellen will push a more limited approach that stops short of outright seizure — a plan targeting the future interest earnings on Russian sovereign assets. In an interview Sunday afternoon, Yellen told us the idea was to do “something more ambitious with the windfall profits.”

“At every point, we have made clear we feel there’s a strong, international legal justification for seizing the assets,” Yellen said. “But, we’d strongly prefer not to act alone and find a way to get the benefit of the assets that can command consensus among the G7.”

There will also be plenty of G7 conversation about the future of sanctions targeting Russia’s energy sector and industrial base, as well as tariffs to compete with China and the future of artificial intelligence regulation. We’ll be tracking all that and more.

— Brendan Pedersen

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