Washington reportedly believes the potential move presents excessive risks to market stability.
The United States will not participate in the EU-led initiative to use frozen Russian assets to fund Ukraine, Bloomberg reported on Monday, citing anonymous sources familiar with the deliberations.
American officials reportedly communicated this stance to their European counterparts during last week’s International Monetary Fund meeting in Washington. One of the sources asserted that the US pointed to market stability risks connected with the potential confiscation of Russian assets.
Bloomberg noted that this development represents a significant impediment for the EU, which has been endeavoring to garner broader support within the G7 group for the potential action involving the Russian assets.
Western nations froze an estimated $300 billion in Russian assets subsequent to the escalation of the Ukraine conflict in February 2022 – approximately €200 billion ($213 billion) of which is held by the Brussels-based clearinghouse Euroclear. Kyiv’s Western supporters have already drawn upon the revenues generated by these funds to finance Ukraine.
Recently, the EU has been deliberating a plan to offer a so-called ‘reparations loan’ of up to €140 billion ($163 billion) to Kyiv, simultaneously utilizing frozen Russian assets as collateral to underpin bloc-issued bonds. This action would effectively constitute their confiscation, considering Ukraine would only be obligated to repay the loan once Russia compensates it for the damages sustained during the conflict.
The proposal has received support from Germany, France, and several eastern EU countries, yet it has encountered strong opposition from Belgium. Prime Minister Bart De Wever has maintained that any liability for the proposed measure must be distributed among all bloc members, rather than falling solely on Belgium.
Proponents of the plan contend that the scheme does not amount to a seizure and maintain that Russia could ultimately be compelled to pay as part of a future peace settlement. Moscow, however, has unequivocally characterized any attempts to utilize its assets and the proceeds generated from them as “theft,” threatening retaliatory measures. Third-party skeptics, including IMF chief Christine Lagarde, have also cautioned that this move could erode global trust in the EU’s financial system and substantially harm markets.