US Treasury Secretary Janet Yellen gave her strongest backing yet for a European Union plan to impose a windfall tax on profits generated by frozen Russian sovereign assets, offering a key endorsement to a measure that would raise fresh funds to support Ukraine.
(Bloomberg) — US Treasury Secretary Janet Yellen gave her strongest backing yet for a European Union plan to impose a windfall tax on profits generated by frozen Russian sovereign assets, offering a key endorsement to a measure that would raise fresh funds to support Ukraine.
Speaking at a press conference in Marrakech, Morocco, at the start of annual meetings of the International Monetary Fund and the World Bank, Yellen said she supported “harnessing windfall proceeds from Russian sovereign assets immobilized in particular clearinghouses and using the funds to support Ukraine.”
“We must continue to impose severe and increasing costs on Russia and continue efforts to ensure Russia pays for the damage it has caused,” she added.
Some EU governments have been waiting for a formal US endorsement of the plan to use profits generated by more than €200 billion ($217 billion) in frozen Russian central bank assets before giving the plan a green light. Much of the funds are in Belgium at settlement giant Euroclear Ltd., where they had generated nearly €750 million by the first quarter of this year.
Yellen’s comments come as US funding for Ukraine faces a new hurdle in Congress after Representative Kevin McCarthy’s ouster as House speaker gave Republican hardliners an opening to stall the next round of aid to Kyiv.
The fate of US assistance for Ukraine’s efforts to fend off Russia’s invasion now rests in large part on the next speaker, who will have to navigate a party sharply divided on the issue.
Yellen sought to allay concerns, saying US allies and the Ukrainian people “can rest assured” that the Biden administration will work to ensure Ukraine receives the assistance it needs.
“I want to be clear that we cannot allow our support to Ukraine to be interrupted,” Yellen said.
Yellen singled out Russia’s war against Ukraine as a “major headwind” to an otherwise improved global economic outlook. She also said the focus on the global economy and on addressing global challenges is shaping the US approach toward its relationship with China.
She said she will meet People’s Bank of China Governor Pan Gongsheng in Marrakech later this week, a meeting that comes on the back of a series of visits and announcements by both sides that point to improved relations after years of heightened tensions.
Ties between the US and China have improved over the past few months, and economic relations, in particular, have thawed since Yellen went to Beijing in July — her first visit there as Treasury secretary.
The two sides have since stepped up communication on economic and financial matters and established two working groups to discuss such issues. Yellen said she would discuss with Pan how Treasury and the PBOC can take forward the group working on financial issues.
A visit by top Chinese officials to the US could be the next step in this rapprochement, and may, in turn, help clear the way for a meeting between Presidents Joe Biden and Xi Jinping in California next month.
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