Yellen to push G7 to bring forward interest on Russian assets to aid Ukraine

By Thomson Reuters May 17, 2024 | 10:51 AM

By David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen will push fellow G7 finance officials next week to agree to a plan to bring forward the interest earnings on frozen Russian assets to provide more money to Ukraine quickly, a senior U.S. Treasury official said on Friday.

The official told reporters ahead of Yellen’s May 21-25 trip to Frankfurt, Germany, and the Group of Seven finance ministers and central bank governors meeting in Stresa, Italy, that the G7 is “making progress” toward consensus on a plan to harness some $300 billion in Russian sovereign assets frozen since Moscow’s 2022 invasion of Ukraine.

The G7 finance ministers have been tasked with recommending a plan for G7 leaders to adopt at a summit in June in southern Italy. The G7 industrial democracies are the United States, Japan, Germany, France, Britain, Italy and Canada.

Yellen had previously pushed for full confiscation of the largely euro-denominated assets, but Europe has balked, opting instead for a more conservative plan to put the earnings — estimated at around $3.5 billion per year — into a fund for Ukraine.

Since then, the U.S. has proposed a plan to bring forward the interest on the assets to back a bond or a loan that would provide Ukraine perhaps $50 billion in the near term as it battles increasing Russian military pressure in its east and north.

The U.S. official said there was a unified goal among the G7 officials to provide more money to Ukraine, and to demonstrate to Russian President Vladimir Putin that he cannot simply “wait out our coalition.”

“What we are involved in is trying to engage in hard, detailed economic diplomacy to make sure we can all get on the same page. And I think we’re making progress there,” the official said, speaking on condition of anonymity.

Another G7 official said the U.S. proposal to use revenues from the Russian assets as collateral for a bond is still on the table, and G7 ministers will discuss its feasibility. But any final decision will be up to G7 leaders, that official said.

Yellen also intends to discuss joint efforts with G7 counterparts to combat China’s excess industrial capacity in strategic industries, including electric vehicles, solar products and semiconductors. This will include the Biden administration’s new punitive tariffs on Chinese imports announced on Tuesday.

(Reporting by David Lawder in Washington; additional reporting by Giuseppe Fonte in Rome; editing by Jonathan Oatis)