In Washington, the substantial aid bundle extended to Ukraine and other allies by President Joe Biden on Wednesday also empowers the administration to appropriate Russian state assets situated in the US for the advantage of Kyiv.

This could translate into an additional $5 billion in support for Ukraine, sourced from frozen holdings of the Russian Central Bank in the United States. The confiscation would be executed pursuant to provisions of the REPO Act, abbreviated for the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, that were assimilated into the aid legislation.

However, it’s improbable that the US will seize the assets unilaterally without concurrence from other constituents of the Group of Seven nations and the European Union.

WHAT DISTINGUISHES FREEZING FROM SEIZING?

At the onset of Moscow’s incursion into Ukraine, the US and its allies promptly immobilized $300 billion in Russian foreign assets. This capital has remained untouched — mostly within European Union territories — as the conflict persists. Yet, approximately $5 billion of it is situated in the US.

The frozen assets are rendered inert and inaccessible to Moscow — albeit they remain the property of Russia. While governments can generally freeze assets without complication, converting said assets into forfeited properties that can be liquidated for the benefit of Ukraine necessitates an additional layer of judicial process, including a legal foundation and adjudication in a court.

For over a year, officials from multiple nations have deliberated on the legality of expropriating the funds and redirecting them to Ukraine.

HOW RAPIDLY COULD THIS UNFOLD?

The new US statute mandates the president and the Treasury Department to commence the identification of Russian assets within the US within 90 days and to furnish a report to Congress within 180 days. Following this period, the president will be authorized, a month thereafter, to “appropriate, seize, transfer, or vest” any Russian state sovereign assets, along with any interests, within US jurisdictions.

Nevertheless, the US aims to engage in consultations with global allies and take concerted action, likely prolonging the process.

National security adviser Jake Sullivan underscored on Wednesday that this issue would feature prominently during the meeting of G7 leaders in Italy in June, emphasizing that “the aspiration is for collective action.”

WHAT ARE THE OPTIONS FOR UTILIZING THE FUNDS?

Biden possesses discretion in determining the utilization of the funds for the benefit of Ukraine — but consultation with other G7 members is requisite prior to any action.

The legislation stipulates that “any endeavor by the United States to expropriate and repurpose Russian sovereign assets” should be undertaken in tandem with international allies, including the G7, the 27-member European Union, and other nations as part of a coordinated initiative.

Policy makers, including Treasury Secretary Janet Yellen, have indicated that the US is unlikely to proceed without the support of G7 allies.

Yellen remarked following the enactment of the bill that “Congress took an important step in that endeavor with the passage of the REPO Act, and I will continue intensive discussions with our G7 partners in the weeks ahead on a collective path forward,” Yellen said.

WILL EUROPE ALSO CONFISCATE RUSSIAN ASSETS?

The European Union has already initiated measures to set aside windfall profits derived from frozen assets of the Russian central bank. The bloc estimates that the interest accrued on these funds could yield approximately 3 billion euros ($3.3 billion) annually.

“The Russians will not be very pleased. The sum of money, 3 billion per annum, is not extraordinary, but it is not insignificant,” EU foreign policy chief Josep Borrell informed reporters in March.

However, certain European leaders have expressed reservations about advancing a plan to formally seize Russia’s assets in Europe.

President of the European Central Bank, Christine Lagarde, articulated at a Council on Foreign Relations event earlier this month that the expropriation of Russian assets “is a matter that requires meticulous consideration” and could “commence undermining the international legal framework.”

WHAT ARE THE IMPLICATIONS?

Detractors of the REPO Act assert that the weaponization of global finance against Russia could jeopardize the status of the US dollar as the world’s preeminent currency.

The confiscation of Russia’s assets could induce nations such as China — the largest holder of U.S. Treasuries — to conclude that it is unsafe to retain their reserves in U.S. dollars.

The conservative Heritage Foundation has censured the seizure of Russian assets for various reasons, including its potential to undermine the dollar-dominated global financial system, contending that “it would expose an already fragile economy to unintended repercussions and hazards for which the United States is ill-prepared.”