In a significant move of solidarity, both US Treasury Secretary Janet Yellen and British Finance Minister Jeremy Hunt expressed their support on Thursday for a European Union (EU) proposal to impose a windfall tax on profits generated by frozen Russian sovereign assets. The intention behind this initiative is to provide financial assistance for the reconstruction efforts in Ukraine, a nation grappling with the aftermath of conflict.
A Treasury spokesperson characterized Yellen's stance on the EU's plan as "sensible" and revealed that she had engaged in discussions regarding frozen Russian assets during her visit to Kyiv in February. Yellen further disclosed that Washington was actively exploring the idea in collaboration with the EU.
Hunt, speaking from Los Angeles in a telephone interview with Reuters, endorsed the EU's concept of redirecting interest earnings from these frozen assets towards Ukraine's reconstruction. He emphasized the need to tread cautiously to avoid unintended consequences, emphasizing, "And I think the most interesting discussions are really about how to use the interest income generated by (frozen) assets to go toward that reconstruction without actually seizing the assets themselves."
Crucially, Hunt underscored the importance of holding Russia accountable for the costs associated with Ukraine's reconstruction as a direct consequence of its invasion. He stated firmly that Russia must understand that these assets will remain frozen until a fair settlement is reached to cover the reconstruction expenses.
Yellen has consistently voiced her support for Ukrainian demands that Russia should bear the financial responsibility for the damage it inflicted upon Ukraine. However, she has also acknowledged significant legal obstacles hindering the complete seizure of the approximately $300 billion in Russian central bank assets that remain frozen due to international sanctions.
EU officials estimate that the windfall profits from Russia's frozen assets in Europe have the potential to contribute a substantial sum of 3 billion euros (approximately $3.27 billion) annually to support Ukraine's extensive reconstruction efforts.
The backing of the EU's windfall tax plan by influential leaders from the United States and the United Kingdom underscores a coordinated international effort to alleviate Ukraine's post-conflict challenges and hold those responsible for the crisis financially accountable.