Washington reportedly believes the potential move bears too many risks for market stability
The US will not join the EU-spearheaded plan to use frozen Russian assets to bankroll Ukraine, Bloomberg reported on Monday, citing anonymous sources familiar with the discussions.
US officials reportedly conveyed the position to their European colleagues during the International Monetary Fund meeting in Washington last week. The US cited risks to market stability associated with the potential seizure of the Russian assets, one of the sources claimed.
The development constitutes a major setback for the EU, which has been trying to secure broader support within the G7 group for the potential action on the Russian assets, Bloomberg noted.
Western nations froze an estimated $300 billion in Russian assets after the escalation of the Ukraine conflict in February 2022 – some €200 billion ($213 billion) of which is held by the Brussels-based clearinghouse Euroclear. Kiev’s Western backers have already tapped into the revenues generated by the funds to bankroll Ukraine.
Recently, the EU has been in discussion of a plan to provide a so-called ‘reparations loan’ of up to €140 billion ($163 billion) to Kiev, while using frozen Russian assets as collateral to back the bloc-issued bonds. The move would effectively amount to their seizure, given that Ukraine would be obliged to repay the loan only once Russia compensates it for the damages inflicted during the conflict.
The proposal has been backed by Germany, France, and several eastern EU countries but faced strong resistance from Belgium. Prime Minister Bart De Wever has insisted that any liability for the proposed move must be shared among all the bloc members rather than Belgium only.
Supporters of the plan argue that the scheme falls short of a seizure and insist Russia could be ultimately forced to pay up as a part of a future peace settlement. Moscow, however, has squarely described any attempts to use its assets and proceedings generated from them as “theft,” threatening retaliation. Third-party skeptics, including IMF chief Christine Lagarde, have also warned that the move could undermine global trust in the EU’s financial system and heavily damage markets.
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