Yellen: It is not legal for the United States to seize Russian public assets

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Bonn — The United States does not have the legal authority to seize the assets of the Russian central bank frozen due to the invasion of Ukraine, Treasury Secretary Janet Yellen said Wednesday, but Russia was put into Ukraine after the war. Reconstruction is underway to discuss with US partners how to make the bill.

Mr. Jellen also said that the special license granted to allow Russia to make payments to U.S. bondholders may not be extended when it expires next week, the first external since the Russian Revolution. He said he would leave a window to rapidly narrow the Russian authorities to avoid default.

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Russia’s February 24 invasion of Ukraine is the central agenda of this week’s gathering of seven finance ministers, and Mr. Jellen said authorities have nearly caused devastating damage to Ukraine and its economy. He said he was looking for a way to pay for the repair. 3 months of war.

“Given the enormous destruction in Ukraine and the enormous reconstruction costs they will face, it is quite natural to look to Russia to help pay at least a portion of the prices we are involved in. I think that’s the case, “Yellen told reporters earlier at this week’s meeting.

One of the ideas that came up recently was for the United States to seize hundreds of billions of assets held by the Central Bank of Russia. The United States and its allies have blocked an estimated $ 300 billion in assets, but retain Russian ownership.

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“(W) We are starting to consider this, but it would not be legal in the United States for the government to seize those assets now,” Yellen said. “It is not legally permitted in the United States.”

Yellen said authorities are looking for ways to hold Russia at least partially responsible for the final reconstruction, while discussions continue to provide Ukraine with other sources of emergency assistance. We hope that the US Senate will soon vote for a $ 40 billion aid package. On Tuesday she pressured US allies to step up their financial support.

Debt repayment room

Russia has about $ 40 billion in international bonds, and so far it has been able to keep its obligations up-to-date and avoid the first default since 1917.

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So far, the ability to make the required dollar-denominated payments is under a temporary general license issued by the Treasury Department’s Foreign Asset Management Office in March. This allowed the exception of a ban on transactions with the Russian Ministry of Finance for the purpose of “receipt of interest, dividends or maturity payments related to debt or capital”.

The next payment will expire on May 25, when the license expires.

Yellen said Wednesday that the Treasury is unlikely to extend the exemption. If Russia relies on paying in rubles instead of dollars as required by bond terms, technical defaults can occur.

“There is no final decision on that, but I think it is unlikely that it will continue,” Yellen said, adding that technical defaults would not change the current situation regarding access to Russian capital.

“If Russia couldn’t find a way to make these payments and technically defaulted, I don’t think it would make a big difference to Russia’s situation. They are already from the global capital market. Separated. “(Report by David Lawder in Bonn and Rami Ayyub in Washington, Written by Dan Burns, Edited by Chizu Nomiyama)