Russia says G-7, E.U. idea to use frozen reserves to aid Ukraine is ‘theft’

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The Kremlin called a suggestion that frozen Russian foreign reserves be used to finance the rebuilding of Ukraine an act of “outright theft,” after Germany’s finance minister told reporters that a comparable move is being discussed among the Group of Seven nations and European Union members.

Russia has not been informed of any plans to appropriate its assets, Kremlin spokesman Dmitry Peskov said Tuesday, according to Reuters. Doing so would be “illegal, blatant” and would provoke an “appropriate response” from Moscow, Peskov added.

Germany is hosting a meeting for G-7 finance ministers this week, and Berlin’s finance chief, Christian Lindner, told four European news organizations that he is willing to consider confiscating the assets of Russia’s central bank. But he cautioned that seizing assets of private citizens, such as Russian oligarchs, could be legally more complicated.

Ukrainian Foreign Minister Dmytro Kuleba, in a Facebook video posted over the weekend, said the idea of transferring seized Russian assets to Kyiv was gaining traction among the G-7, an assembly of economic powers.

“This is literally about hundreds of billions of euros,” he said.

West takes aim at Russian central bank reserves, threatening blow to economy

Russia stockpiled reserves domestically and in friendly nations after its 2014 annexation of Crimea, but its finance minister said Moscow had lost access to just under half of its roughly $640 billion in foreign reserves. Its ability to tap those funds was swiftly cut off as part of an international sanctions program following its Feb. 24 invasion of Ukraine.

Moscow’s inability to use its foreign funds has created challenges for its central bank, which imposed capital controls to prevent a run on the Russian ruble. (It recently eased some limits on moving foreign currency.)

As the invasion devastates the Ukrainian economy, calls to use frozen Russian assets to help Kyiv rebuild are growing louder. Last month, President Biden proposed allowing Washington to liquidate the assets of Russian oligarchs and to donate the proceeds to Ukraine. The Biden administration is also considering how to legally use Russian state funds frozen in the United States to rebuild Ukraine, Secretary of State Antony Blinken told lawmakers in April.

But these proposals have raised concerns among some international law experts, who warned that the administration cannot appropriate Russian funds because the Kremlin has not directly attacked the United States. Civil liberties advocates also say due-process rights could be violated if the targeted individuals are not able to contest the seizures in court.

The United States has appropriated frozen foreign state assets in the past, although sending funds for a third-party country’s use is unusual. The Trump administration made frozen Venezuelan assets available to an opposition figure whom Washington recognized as that country’s legitimate leader, while the George W. Bush administration seized Iraqi funds to finance reconstruction there after Saddam Hussein’s regime was toppled. The Supreme Court has also allowed U.S. victims of terrorism to access frozen Iranian state funds.

Most recently, Biden announced in February that he plans to allocate $3.5 billion in frozen Afghan reserve funds for humanitarian and other assistance in Afghanistan. Another $3.5 billion would be reserved for families of 9/11 victims who have legal claims against the Taliban.

Karen DeYoung and Annabelle Chapman contributed to this report.

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