US Is Stalling on G-7 Plan to Expand Use of Russian Assets

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(Bloomberg) — The US is balking at a European Union-led plan for Group of Seven nations to expand the use of frozen Russian assets to support Ukraine, according to people familiar with the discussions. 

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US officials informed their European counterparts that they won’t, for now, be joining the initiative during conversations on the sidelines of the International Monetary Fund meeting in Washington last week, the people said, asking not to be named as the talks were private. The US cited risks to market stability as the reason for its reluctance, one of the people said. Another said the US simply was non-committal at this stage.

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The move marks a setback for the EU, which has been trying to get the rest of the G-7 to join its plan to use the frozen central-bank assets as security to raise loans of as much as €140 billion ($160 billion) for Ukraine. The European Commission, the bloc’s executive arm, is preparing a detailed design of the mechanism but won’t publish it before EU leaders give their approval, potentially at a summit in Brussels later this week.

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The US pushback coincides with a renewed White House effort to halt the fighting in Ukraine. President Donald Trump received Ukraine’s Volodymyr Zelenskiy in Washington last week and announced plans to meet with Vladimir Putin in Budapest in the near future following a call with the Russian leader. 

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The US Treasury didn’t respond to a series of messages seeking comment. In September, Treasury Secretary Scott Bessent said the US was open to using roughly $5 billion of Russian assets frozen in the US. “We’ve passed a resolution that says we can seize them,” he said. “We haven’t said we’re going to.”

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Washington’s hesitation — and its concerns about market stability — are likely to embolden doubters within the EU, including Belgium, where the bulk of the assets are held. The Belgians have warned that any extended use of the assets could trigger lawsuits exposing governments to massive liabilities, destabilize the credibility of Europe’s financial hub and even weaken the euro. 

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The European Central Bank has previously voiced similar concerns. On Sunday, President Christine Lagarde endorsed the idea of using the assets as collateral, but underlined that it would be better if all the countries holding those assets acted together. 

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Most of the €280 billion of frozen Russian assets are held in Europe, mostly at Belgium’s Euroclear. While the interest income of those assets is already being channeled to Kyiv, the EU is now exploring loans backed by the frozen holdings as a way to release significant new funding. But that’s a legally and financially complex structure designed to avoid outright confiscation, and it could invite legal challenges from Moscow.

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European officials voiced frustration at the US backing away from the plan at a point where they are already moving ahead, since the Trump administration has been urging the EU to make greater use of the Russian funds. While the amount of assets held in the US is minimal, US backing for the EU plan would have been a positive signal to other countries.

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Within the G-7, the UK and Canada are supporting Europe’s initiative, while Japan is seen siding with the US in taking a more cautious approach.

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—With assistance from Daniel Flatley.

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