Frozen Russian assets may fund Kyiv

Country needs another $40B a year to continue paying old age pensions, health-care salaries

- DAVID MCHUGH AND FATIMA HUSSEIN

On Thursday, the eve of the G7 finance ministers meeting in Stresa, Italy, U.S. Treasury Secretary Janet Yellen said that unlocking frozen Russian assests will be key to Ukraine's economic survival.

Allies of Ukraine are wrestling with how to squeeze money out of frozen Russian assets to support Kyiv’s war effort, a debate ever more urgent as Russia gains territory on the battlefield and as the outlook for Ukraine’s state finances looks shakier.

What to do with the Russian central bank reserves frozen in response to the invasion of Ukraine is at the top of the agenda as finance officials from the Group of Seven rich democracies meet Thursday through Saturday in Stresa, Italy, on the shores of scenic Lago Maggiore.

The issue: Ukraine and many of its supporters have called for the confiscation of $260 billion (U.S.) in Russian assets frozen outside the country after the Feb. 24, 2022, invasion. But European officials have resisted, citing legal and financial stability concerns. And most of the frozen assets are located in Europe.

A European plan to merely use the interest on the Russian funds would provide only a trickle of money every year — some $2.5 billion to $3 billion at current interest rates. That would barely meet a month’s financing needs for the Ukrainian government.