G7 Discussing Deal to Use Seized Russian Assets for Ukraine, US Official Says

“We're waist-deep in the sausage-making of trying to strike a deal,” Singh said during an event June 6 hosted by the Center for a New American Security. “I wish I could say the deal was done, but we don't yet have full consensus.”

The U.S. and the EU have both adopted laws that could allow their governments to take some money from sanctioned Russian assets and use those funds to aid Ukraine (see 2405210064 and 2405210024). Singh said the G7 proposal could “mobilize $50 billion for Ukraine now” and “multiples of that amount down the road,” but he said members have expressed concerns about the legal challenges they may face in implementing the deal.

“Congress has helpfully made it very clear that we in the U.S. have the ability to seize the principal and the interest on the immobilized Russian assets,” Singh said, referring to the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, which President Joe Biden signed into law in April (see 2404240043). “But that's not the case in many G7 countries.”

He said the G7 nations know “how dire the situation is on the ground” and want to help Ukraine because they understand the “costs of inaction.” But Singh said the U.S. can’t be the only nation using the seized Russian assets.

“We only have $5 billion out of the $300 billion plus of immobilized reserves,” he said. “So if we want to generate a bigger number, then we need to act with solidarity.”

Singh was also asked whether the G7 plans to announce new China-related sanctions after their meetings next week, including new restrictions on Chinese companies or Chinese banks that continue to ship or facilitate shipments of sensitive items to Russia’s military.

“I would just say: stay tuned,” he said. “Apart from funding Ukraine's fight for freedom, I think another prominent theme (during the G7 meetings) is going to be disarming the Russian war machine. And so you can connect the dots with China.”

He also suggested that new export controls or sanctions may not be effective if they are only targeting individual Chinese companies, or other entities, that are shipping to Russia. “Picking a handful of Chinese companies that are sending a handful of dual-use products and thinking that we've meaningfully changed the course of this war -- that's a flawed assumption,” Singh said. “We’re getting to the point at which we've got to think about the entire Russian economy as being off limits in terms of facilitating the flow of goods that are showing up on the battlefield and giving Russia advantage.”

He also said the Biden administration is trying to craft a better way to identify sensitive technologies that should be subject to export controls. U.S. agencies are “trying to lay down a strategic anchor for these export controls” by pinpointing the technologies that are both “foundational” to American national security and in which the U.S. has a technological lead compared to its adversaries, such as China.

“For that subset, that's where our adversaries have maximal incentive to close the gap if technology diffusion was unfettered,” Singh said.

When looking for new technologies to control, the administration is thinking about whether an adversary country is close to developing those technologies on their own, whether they can substitute those items by buying from third countries, and whether the U.S. can “plausibly build a coalition” of allies to also place export controls around those items. The “hardest part,” Singh said, is trying to simulate “an escalatory tit for tat on controls” between the U.S. and the target country.

He called this the “most intense period of geopolitical competition in at least 30 years, maybe 80 years.” The U.S. is “using the tools of economic statecraft, mostly the restrictive tools -- sanctions, export controls, tariffs, price caps, investment restrictions -- with more frequency and more potency than ever before,” Singh said. “That's the reality.”