Group of Seven (G7) allies who are wary of confiscating frozen Russian assets outright may support a U.S. proposal to use interest earnings from the funds to aid Ukraine instead, U.S. Treasury Secretary Janet Yellen told Reuters in an April 25 interview.
Ukraine's Western partners and other allies froze around $300 billion in Russian assets at the start of the full-scale invasion in 2022. G7 finance ministers are currently discussing ways to convert the Russian funds into financial assistance for Ukraine.
Yellen told Reuters that the frozen funds can be used to aid Kyiv without having to be confiscated directly.
"This is an approach that could be broadly supported by countries that are concerned about the seizure of assets, and some of the interest could be brought forward through, for example, a loan," Yellen said.
Yellen praised the EU's plan to set aside sanctions-related profits earned at the central securities depository Euroclear and transfer the money to Ukraine, calling it "a welcome step."
Most of Euroclear's Russian assets have now been converted into cash, Yellen said. These funds could produce around $5 billion a year in interest, according to G7 officials.
According to Yellen, the U.S.-backed plan to use interest from frozen Russian assets to back future loans to Ukraine will be one of the options debated by G7 nations ahead of a June leaders' summit.
"(I)t certainly belongs on the list," she said.
The U.S. proposal is now gaining popularity among G7 allies, two officials told Reuters.
Earlier this week, the U.S. government passed the REPO Act, allowing the seizure and transfer of frozen Russian assets held in the U.S. to Ukraine.
Dominic Culverwell
