US Votes on Seizing Russian Assets: Implications and Impact

Of the $300 billion in frozen Russian assets, more than $6 billion are held in US banks.

TFD – Explore the potential consequences of the US vote to seize Russian assets, including the impact on international relations and global finance. Understand the role of the REPO Act and the political pressure faced by G7 nations.

A vote in the House of Representatives on Saturday might allow President Joe Biden to seize and give to Ukraine billions of dollars’ worth of frozen Russian government assets that are currently sitting in banks around the United States and Europe.

In an interview on Friday, former US ambassador to Russia Michael McFaul—who supports using Russian resources to assist Ukraine—said, “Someone has to pay for reconstruction.” “And I believe Putin, not the American people, should be in charge.”

The foreign aid package that has been stuck in the House for months includes the REPO Act, which would allow Biden to seize the frozen Russian assets in American institutions and move them to a special fund for Ukraine. Of the $300 billion in frozen Russian assets, more than $6 billion are held in US banks. Germany, France, and Belgium account up the majority of the $300 billion.

Tens of billions of dollars in help for Taiwan, Israel, and the Ukraine will be included in the proposal that Speaker of the House Mike Johnson unveiled on Wednesday.

“I’m going to give every House member a chance to vote their conscience and their will on this,” Johnson said to reporters in support of his choice to enable the vote to take place on Saturday.

In order to maintain the stability of the ruble, Russian President Vladimir Putin and his administration made significant investments in the euro and the dollar over time, amassing approximately $300 billion in foreign exchange reserves.

However, all of the Group of Seven (G7) nations—the United States, the United Kingdom, Canada, France, Germany, Italy, and Japan—joined forces in the early months of 2022 in response to Putin’s invasion of Ukraine, and they all decided to freeze the $300 billion in Russian foreign exchange reserves that were kept in those nations’ banks, the most of which was in Europe.

According to Chris Miller, a professor at Tufts University’s Fletcher School, “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.” For this reason, the majority of Russia’s reserves are frozen in western banks today.

The notion of seizing the Russian assets surfaced in the previous year and has been fiercely opposed by specialists in foreign policy and economics.

Contributing opinion writer Christopher Caldwell stated in a recent New York Times op-ed that seizing the Russian money would be a “terrible idea” since it would discourage foreign investment in the United States, which would have long-term detrimental effects on the economy.

The dollar’s standing as the primary reserve currency of the world may be weakened by this. According to Caldwell, the dollar is most likely the most significant strategic asset that the US possesses.

After months of advocating for the REPO Act, McFaul shot back at Caldwell’s claim, arguing that using Russian assets for Ukraine would send a strong message to despotic countries everywhere.

Some argue that this will negatively impact the value of the dollar. It damages our standing. That pushes back on me. Criminals buying in US Treasury bonds is something I do not want,” McFaul declared.

Persuading the other G7 nations to follow suit would be one of the diplomatic obstacles. France and Germany have been quiet about the concept, but the United Kingdom supports it.

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

While all of this is going on diplomatically, a shadowy group has been steadily pressuring Congressmen, the White House, and the G7 nations to proceed with the concept of seizing the money.

A letter was delivered on Friday by the Renew Democracy Initiative, a nonprofit organization based in Washington, DC, that supports democracy and American interests abroad. The letter asked House Minority Leader Hakeem Jeffries and Majority Leader Johnson to collaborate in order to enact the REPO Act.

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

In a Friday interview, Epshtein stated that he thinks the United States must move to force the G7 to work together to seize the money.

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