U.S. Treasury Department approves blocked Russian funds to be allocated for the reconstruction of Ukraine

AP

U.S. Treasury Secretary, Janet Yellen offered her strongest endorsement to date for the plan to liquidate around $300 billion in assets from the Russian Central Bank, blocked to be used for the reconstruction of Ukraine. 

"It is necessary and urgent for our coalition to find a way to unlock the value of these frozen assets to support Ukraine's ongoing resistance and its long-term reconstruction," said Yellen in Sao Paulo, Brazil, where she is meeting with finance ministers and central bank governors from the Group of 20 (G20) countries. 

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"I believe there are strong arguments in favor of this, both from the perspective of international law and economic and moral considerations. It would be a decisive response to the unprecedented threat Russia poses to global stability," stated the official. The United States and its allies froze millions in Russian assets in response to the country's invasion of Ukraine. These assets have remained unused two years into the war as officials debate the legality of sending that money to Ukraine. 

More than two-thirds of Russia's frozen assets are in the European Union. Using that money to help Kyiv "would make it clear that Russia cannot win by prolonging the war and would encourage it to come to the table to negotiate a fair peace with Ukraine." The idea of using Russian assets has been gaining momentum lately as uncertainty grows about further financial support for Ukraine, and the U.S. 

Congress remains divided on the assistance issue. However, the move also carries risks, as using global finances for political purposes could harm the position of the U.S. dollar as the world's dominant currency. 

Yellen stated on Tuesday that it is "extremely unlikely" that the use of Russian assets will harm the dollar's position, "especially given the uniqueness of the situation, where Russia is blatantly violating international norms." "There is no realistic alternative to the dollar, the euro, and the yen," she added. 

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In early February, the European Union approved a law to set aside proceeds from frozen assets of the Russian central bank. Yellen called it "an action that I fully support." 

Brazil inaugurated its G20 presidency this month, with the finance ministers' meeting taking place this week. Among the agenda items are ways to alleviate poverty, climate change, and the wars in Gaza and Ukraine. G20 leaders will gather on November 18-19 in Rio de Janeiro.