The US issued a new law to confiscate Russian assets, Moscow responded harshly

According to the Associated Press, that could mean an additional $5 billion in support for Ukraine, coming from assets of the Russian Central Bank that have been frozen in the US. The confiscation would be carried out under the provisions of the Rebuilding Economic Prosperity and Opportunity for Ukrainians (REPO) Act, which was included in the aid bill.

But it is unlikely that the US will confiscate Russian assets without the consent of other members of the G7 Group and the European Union (EU).

Difference between freeze and confiscation

According to AP, the US and its allies immediately blocked $300 billion in Russian foreign assets when Moscow launched a special military campaign in Ukraine. That money remains untouched – largely in EU countries – as fighting continues. But about $5 billion of that is in the US.

These assets will be frozen and inaccessible to Moscow – but they will still belong to Russia. While governments can generally freeze assets without difficulty, confiscating such assets and possibly using them for the benefit of Ukraine requires an additional layer of judicial proceedings, including including legal basis and trial in court.

For more than a year, officials from multiple countries have debated the legality of confiscating the money and sending it to Ukraine.

How could this happen?

The new US law requires the President and the Treasury Department to begin identifying Russian assets in the US within 90 days and report back to Congress within 180 days. One month after that deadline, the President will be authorized “confiscate, transfer or hand over” any property under the sovereignty of the Russian state, within the jurisdiction of the United States.

However, the US wants to continue to consult with global allies and act together, which will likely slow down the process.

US National Security Advisor Jake Sullivan said on April 24 that this issue will be an important topic when leaders of G7 countries meet in Italy in June, adding that “ideally we all act together”.

What can America do with the money?

Under the REPO Act, President Biden is authorized to decide how the money can be used for Ukraine’s benefit – but he must consult with other G7 members before acting.

This Act clearly states that “any attempt by the United States to confiscate and reappropriate Russian sovereign assets” must be done together with international allies, including the G7, the 27 EU members and other countries as part of a coordinated effort.

US policymakers, including Treasury Secretary Janet Yellen, said the US would not be able to act without the support of its G7 allies.

After the bill was passed, Ms. Yellen said: “Congress [Mỹ] took an important step in that effort with the passage of the REPO Act, and I will continue in-depth discussions with our G7 partners in the coming weeks about a common path forward.”

Russia threatened to downgrade relations with the US

RIA Novosti news agency (Russia) quoted Russian Deputy Foreign Minister Sergei Ryabkov as saying on April 25 that the country is considering downgrading diplomatic relations with the US if Western governments proceed with confiscation proposals. Russia’s frozen assets.

Mr. Ryabkov said: “Of course, lowering the level of diplomatic relations is one of the options. Many senior representatives in our government have spoken out about problems in responding financially, economically and materially.” our quality to the step [tịch thu] This is something we have previously warned our competitors not to do.”

“We are currently studying the optimal form of response, where countermeasures include actions against the assets of our Western adversaries as well as diplomatic countermeasures,” Mr. Ryabkov added.

Mr. Ryabkov did not specify what downgrading diplomatic relations might lead to.

According to RIA Novosti, the two sides have not made any official move to downgrade relations since Russia launched a special military campaign in Ukraine in February 2022. The Kremlin recently described the current state of bilateral relations as “below zero”.

Will Europe also confiscate Russian assets?

According to EU officials, the bloc has begun to make unexpected profits from the frozen assets of the Russian Central Bank. It is estimated that profits from frozen assets could bring in about 3 billion euros/year.

“The Russians will not be very happy. The amount of 3 billion euros/year is not too terrible but it is not insignificant either,” EU High Representative for Foreign Affairs and Security Policy Josep Borrell told reporters in March.

However, some European leaders still express hesitation about moving forward with a formal plan to seize Russian assets in Europe.

European Central Bank (ECB) President Christine Lagarde said at a European Council on Foreign Relations (ECFR) event earlier this month that the seizure of Russian assets “is something that needs to be considered very carefully” and maybe “begins to disrupt the international legal order”.