US House of Representatives approves the transfer of $8 billion in frozen Russian assets to Ukraine

The House passed a foreign aid package on Saturday, as well as the REPO Act, which will allow the Biden administration to confiscate billions of dollars’ worth of Russian assets sitting in U.S. banks and transfer them to Ukraine for reconstruction.

“By delivering urgently needed aid to Ukraine, the United States has reasserted itself as the leader of the free world and as a reliable partner to its allies,” said Rep. Ritchie Torres, D-N.Y.  “The US has a singular obligation to help freedom fighters fight for their freedom, and nowhere more so than in Ukraine, whose self-defense against Putin’s aggression must prevail.”

The REPO Act, which would authorize Biden to confiscate the frozen Russian assets in U.S. banks and transfer them to a special fund for Ukraine, is part of the foreign aid package that was stalled for months in the House. More than $8 billion of the $300 billion in frozen Russian assets are sitting in U.S. banks. Most of the $300 billion are in Germany, France and Belgium.

On Wednesday, Speaker of the House Mike Johnson released the package which would include tens of billions of dollars in aid for Ukraine, Israel, and Taiwan. 

“I’m going to a allow an opportunity for every single member of the House to vote their conscience and their will on this,” Johnson told reporters, defending his decision to allow the vote to go forward Saturday.

Russian President Vladimir Putin and his government invested heavily in the euro and the dollar over the years to keep the ruble stable, planting some $300 billion worth of foreign currency reserves. 

But in early 2022, following Putin’s invasion of Ukraine, all of the Group of Seven (G7) countries including the U.S., U.K., Canada, France, Germany, Italy and Japan banded together and froze all of the $300 billion dollars of Russian foreign currency reserves held in banks in those countries, most of the money in Europe.

“The Russians were surprised when, right after the war started, the Europeans took the exact same measures as the United States, freezing all of the reserves that were there and the Japanese did the same, which is why most of Russia’s reserves today are frozen in western banks,” said Chris Miller a professor at the Fletcher School at Tufts University.

The idea to confiscate Russian assets emerged last year and has been hotly contested by economists and foreign policy experts.

In a recent op-ed in the New York Times, contributing opinion writer Christopher Caldwell argued that it’s a “terrible idea” to confiscate the Russian funds because other countries might stop investing in the U.S. which could negatively affect the economy in the long run.

“This could weaken the dollar’s status as the main global reserve currency. The dollar is probably the most valuable strategic asset the United States has,” Caldwell argued.

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