What is the value of Russian assets in the US that will be confiscated?

The U.S. House of Representatives on Saturday passed a foreign aid package as well as the so-called REPO bill that would allow the Biden administration to confiscate billions of dollars worth of Russian assets held in U.S. banks

by Sededin Dedovic
What is the value of Russian assets in the US that will be confiscated?
© Nathan Howard / getty Images

On Saturday, the US House of Representatives passed a foreign aid package, along with a law called REPO, which would allow the Biden administration to take control of billions of dollars worth of Russian property held in US banks and transfer it to Ukraine for reconstruction, NBCnews reports.

"By delivering emergency aid to Ukraine, the United States has reaffirmed its leadership in the free world and proven itself as a reliable partner to its allies," said Democratic Representative Richie Torres. "The United States has a unique obligation to support those fighting for their freedom, and this is especially true in Ukraine, whose defense against Putin's aggression deserves a victory." The REPO bill, which would have authorized Biden to take frozen Russian assets in American banks and direct them to a special fund for Ukraine, is part of a broader foreign aid package that has been blocked in the House of Representatives for months.

Over $6 billion of the total $300 billion in frozen Russian assets is in American banks. Most of those 300 billion dollars are located in Germany, France and Belgium. On Wednesday, House Speaker Mike Johnson announced a package that includes tens of billions of dollars in aid for Ukraine, Israel and Taiwan.

Speaker of the House Mike Johnson (R-LA) speaks with members of the media following passage of a series of foreign aide bills at© Nathan Howard / Getty images

Russian President Vladimir Putin and his administration have invested significant resources to maintain the stability of the ruble, investing around $300 billion in foreign exchange reserves.

However, in early 2022, following Putin's invasion of Ukraine, all of the Group of Seven (G7) countries, including the US, Britain, Canada, France, Germany, Italy and Japan, banded together and froze all of the $300 billion in Russian foreign exchange reserves that were placed in the banks of these countries, with the largest part of the money being in Europe.

"The Russians were surprised when, immediately after the start of the conflict, the Europeans took the same measures as the United States, freezing all the reserves that were there, and the Japanese did the same, which is why most of the Russian reserves are frozen in Western banks today." said Chris Miller, a professor at the Fletcher School at Tufts University.

The idea of confiscating the Russian property fund appeared last year and was met with sharp criticism from economists and foreign policy experts. In a recent article in the New York Times, Christopher Caldwell argued that confiscating Russian funds is a "terrible idea" because other countries might stop investing in the US, which could have negative effects on 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. Michael McFaul, the former US ambassador to Russia, who lobbied for months for the REPO bill, responded to Caldwell's claim by saying that using a Russian sovereign wealth fund to help Ukraine would send an important message to autocratic regimes around the world.

"There are those who argue, 'Well, this is going to hurt the dollar. It's bad for our reputation.' I don't agree with that. I don't want criminals investing in US Treasury bonds," McFaul said. One of the diplomatic challenges would be to convince other G7 members to do the same.

While Great Britain agrees with the idea, France and Germany have abstained. Meanwhile, one group is persistently pressuring members of Congress, the White House and members of the G7 to support the idea of confiscating Russia's wealth fund.

The Restoring Democracy Initiative (RDI), a Washington, D.C.-based nonprofit that promotes democracy and American interests abroad, sent a letter Friday to Majority Leader Johnson and House Minority Leader Hakeem Jeffries urging them to work together to pass the REPO bill.

"Your leadership through legislative action will increase the likelihood that the administration will take the necessary steps to confiscate Putin's billions," wrote RDI President Garry Kasparov and RDI CEO Uriel Epstein.

The U.S. House of Representatives approved $95 billion in foreign aid to Ukraine, Israel and other U.S. allies on Saturday, as Democrats and Republicans joined forces after months of resistance from the far right over renewed U.S.

support for repelling a Russian invasion. By an overwhelming majority, $61 billion in aid to Ukraine passed in minutes, a strong result as US lawmakers race to provide a new round of US support to the war-torn ally. Many Democrats cheered on the floor of the House of Representatives and waved Ukrainian flags.

Speaker Mike Johnson, who helped get the package passed, said after the vote: "We did our job here and I think history will judge it well," the Guardian reports.