US Treasury official visits Ukraine to discuss sanctions on Moscow and seizing Russian assets

WASHINGTON (AP) — A senior U.S. Treasury official has met with Ukrainian officials in Kyiv to discuss U.S. financial support, enforcing sanctions on Russia and using frozen Russian assets for Ukraine’s benefit in the war with Moscow.

The visit this week by Deputy Secretary Wally Adeyemo came as Russia gains territory after a lengthy delay in U.S. military aid left Ukraine at the mercy of Russia’s bigger army. Meantime, the outlook for Ukraine’s state finances is on shakier ground.

“Russia’s economy has become a wartime economy where every means of production and industry is now focused on building weapons to fight their war of choice and aggression here in Ukraine,” Adeyemo told reporters Wednesday in Ukraine’s capital. “And we need to do everything that we can to go after that.”

Adeyemo held talks with officials in Ukraine’s finance ministry and president’s office. At the Kyiv School of Economics, he spoke with faculty and civil society groups working on sanctions policy and ways to make the penalties against Russia more effective.

President Joe Biden signed legislation in April that allows Washington to seize the roughly $5 billion in Russian state assets located in the United States. But the majority of the $260 billion in frozen Russian assets are in Europe, and U.S. officials are hoping for a consensus from their European allies on how to spend that money.

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U.S. Treasury Secretary Janet Yellen met in Italy last week with her counterparts from the Group of Seven nation to discuss how to squeeze money out of the frozen Russian assets to back Kyiv’s war effort.

She said loaning Ukraine $50 billion from the assets “has been mentioned as a possible number that could be achieved,” but that the specific approach was under discussion.

Adeyemo, meanwhile, took aim at China’s economic support of Russia through its sale of dual-use goods. U.S. officials have said China has surged sales to Russia of machine tools, microelectronics and other technology that Moscow is using to produce missiles, tanks, aircraft and other weaponry for use in the war.

China has said it is not providing Russia with arms or military assistance, although Beijing has maintained robust economic connections with Moscow, alongside India and other countries, amid sanctions from Washington and its allies.

“The only way that Russia is able to build the weapons they want is that they can get dual-use goods from China,” Adeyemo said. “Only through the support of the Chinese are Russia able to build these weapons at the scale they need to continue this war and to be able to fight this war of aggression and to be able to build the military industrial complex that they need going forward.”

U.S. officials are pressuring American companies to ensure their products do not end up in the hands of Russia’s military.

Daleep Singh, deputy U.S. national security adviser for international economics, said in a speech Tuesday at the Brookings Institute in Washington that he wanted “to issue an urgent call for corporate responsibility — a percentage of Russian battlefield weaponry with U.S. or allied branded components is unacceptably high. Put your creativity and resources to work. Know your customers and know their customers.”

Adeyemo said he will give speech Friday in Berlin on how the U.S. and its allies “can do more to make sure that goods from our countries are not being shipped through third countries and ending up in Russia as well.”

Since the beginning of Russia’s invasion of Ukraine in February 2022, the U.S. has sanctioned more than 4,000 people and businesses, including 80% of Russia’s banking sector by assets.

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Kullab reported from Kyiv, Ukraine.