US backs plans to help Ukraine with profits from Russia’s frozen assets

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US Treasury secretary Janet Yellen has backed European proposals to use profits generated by Russian assets frozen at international financial institutions to help Ukraine.

Yellen said on Wednesday she supported “harnessing windfall proceeds from Russian sovereign assets immobilised in particular clearinghouses and using the funds to support Ukraine”.

The comments mark a strong show of support from the US for European plans to access more than €200bn of Russian central bank assets immobilised in Europe in response to Moscow’s full-scale invasion of Ukraine last year. The bulk of those funds is held at the world’s largest clearinghouse, Belgium’s Euroclear.

Yellen said in a press conference in Marrakech that the US “must continue to impose severe and increasing costs on Russia and continue efforts to ensure Russia pays for the damage it has caused”.

Western countries froze a total of about $300bn worth of Russian reserves in response to Moscow’s full-scale invasion of Ukraine in February last year.

European countries have been looking into ways of siphoning off profits generated by the frozen assets and accumulating at Euroclear, in order to use those funds to support Ukraine.

Yellen’s support is notable given sceptical voices within the EU and the European Central Bank, who raised concerns about tapping Russia’s frozen assets and the repercussions such a move could have on international markets. Her clear stance could now advance those discussions.

EU experts have been looking into the legal hurdles of accessing the profits, which stem from payments on bonds owned by the Russian central bank. The proceeds are then routinely reinvested by Euroclear. Officials are due to meet again to discuss the issue in early November, likely together with the ECB.

Belgium has already racked up a considerable tax income on the profits generated by the frozen assets at Euroclear, and on Wednesday announced it would put that money into a fund to help Ukraine.

Belgian prime minister Alexander De Croo said the country would launch a €1.7bn fund to help finance the war in Ukraine.

“The source of that fund are the billions of Russian assets that are being frozen in Belgium,” De Croo told reporters in Brussels during a visit by Ukrainian president Volodymyr Zelenskyy, adding that the money would be used to buy military equipment and for humanitarian support.

Yellen’s message came alongside a pledge that securing funding for Ukraine was an “absolute top priority” for the Biden administration after Congress scrapped aid last month in order to avert a US government shutdown. Yellen said there was bipartisan support for more assistance. A new budgetary deadline is approaching in mid-November.