(Updates link to Yellen Kyiv visit story)
By David Lawder
Feb 27 (Reuters) - U.S. Treasury Secretary Janet Yellen
said on Monday that Russia should bear the costs of damage
caused by its invasion of Ukraine, but there are "significant
legal obstacles" to confiscating major frozen Russian assets.
Yellen, speaking to reporters by phone during a surprise
trip to Kyiv, said the the United States would study Ukraine's
calls to impose sanctions on Russia's nuclear energy sector, but
needed to be "mindful" of potential consequences of such an
action on Western allies.
Yellen said the United States and its allies were discussing
strategies to ensure that Russia pays for the devastation that
its war, now in its second year, with estimates in the hundreds
of billions of dollars and growing every day.
Washington has confiscated assets used in criminal activity
but central bank and other large pools of assets frozen by
sanctions are another matter.
"We have on this small scale, seized assets, but there are
certainly legal challenges in doing more than that," she said.
The United States and Western allies have seized more than
$300 billion in Russian central bank foreign currency assets
frozen by sanctions. The assets are held abroad, with a
significant portion at the Federal Reserve Bank of New York, but
remain under Russian ownership.
Some European officials have called for their full seizure
and Ukrainian Prime Minister Denys Shmyhal said he and Yellen
had discussed the issue earlier on Monday.
RUSSIAN URANIUM
Russia's nuclear energy sector has thus far escaped several
rounds of sanctions, partly because a number of countries,
including France, rely on Russia's Rosatom for uranium supplies.
"We want to deprive Russia of revenue. We also need to look
at potential consequences of the sanctions for ourselves and our
partners," Yellen told reporters.
She also repeated that the United States has warned China of
"really severe consequences" should the Beijing government,
Chinese firms or financial institutions provide material support
to Russia's war effort or help Moscow evade U.S. sanctions.
"It's something we wouldn't tolerate," she added.
Asked about what assurances she received that Ukraine is
responsibly using over $14 billion of direct U.S. economic and
budget aid, Yellen said there were strong controls over funds
distributed via the World Bank, but it was important for Ukraine
to continue its anti-corruption and governance efforts.
"(Ukrainian) President (Volodymyr) Zelenskiy is committed to
addressing it and is in the process of putting in place for
example, independently appointed directors in some of the
largest state-owned firms," she said.
(Reporting by David Lawder, additional reporting by Rod Nickel;
Editing by Mike Collett-White)
david.lawder.thomsonreuters.com@reuters.net))
