There’s one final way Biden can fund Ukraine’s fight against Russia, researchers say

Trump and Biden offer starkly different approaches to the war in Ukraine.

President Joe Biden’s final move to help Ukraine should be to seize Russia’s reserve assets held by the US before the start of Donald Trump’s second term, two researchers wrote this week.

“To motivate Europe to stand on its own in the era of Trump, President Joe Biden should set the precedent for sovereign seizure and confiscate the estimated $4-5 billion of Russian assets in the United States’ jurisdiction,” Foreign Policy Research Institute fellow Maximilian Hess wrote alongside Carey K. Mott, a researcher at the Yale Program on Financial stability.

Congress granted the outgoing president this authority in an April law known as the REPO Act, but Biden has held off on using it until European powers follow suit.

The US and its Western allies froze roughly $322 billion worth of Russia’s foreign reserves in 2022 as part of the package of financial and economic sanctions againts the Kremlin over its invasion of Ukraine.

These assets are recognized as a significant source of potential defense funding for Kyiv, but Western leaders have been cautious. To avoid a negative response from Moscow, complete seizure of the assets has so far been off the table. Instead, the Group of Seven has agreed to use profits from the frozen funds as collateral for a $50 billion loan to Ukraine.

But Hess and Mott argue that more should be done before the White House changes hands. President-elect Trump could withdraw US financial backing for Kyiv, they said, pulling a key pillar of support for the country’s fight against Russia.

The researchers expect that Biden has been waiting for unilateral “political will” to seize Kremlin assets, but the chances of finding this in Europe appear slim.

“Europe has demurred, citing negative impacts to the euro and concerns over the European Union’s international financial role,” they said. “Saudi Arabia, for example, has threatened to sell its European debt holdings if Europe seizes the frozen assets.”

Political realities among EU leaders also play a role, Hess and Mott noted, citing a dissolved coalition in Germany and Hungary’s continued opposition.

Faced with this, Biden should forgo multilateral action before he leaves office in January, they argued. The US wouldn’t be completely alone in doing so — both Canada and the United Kingdom appear willing to seize assets held in their countries.

“But neither ally will act unless they are following Washington’s lead. By setting a precedent for exercising asset-seizure authority, and demonstrating Putin’s limited ability to respond, the United States and its allies can help smooth the legislative path to asset seizure in Europe, opening the possibility for the European Parliament to finance Ukrainian resistance if the next U.S. presidential administration does pull back its support.”

Russia has warned of retaliation if its frozen assets are seized, cautioning that it could seize Western-owned corporate assets still in the country.

On Wednesday, Treasury Secretary Janet Yellen noted that the administration is considering extra sanctions on Russia before it leaves the White House. She also told Bloomberg TV that Washington’s contribution to the Ukraine loan should stay in place in the future.

“What we’re really trying to do is to strengthen Ukraine’s situation, its ability to defend itself, and hopefully at some point to come to the table to bargain with Russia for a just peace,” she said.