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US, Partners Explore Seizing RU Assets to Back Loans to UKR; U.K. Boosts Military Aid to UKR Amid US Deadlock; 49 Combat Clashes On Front Lines; RU Loses 5 Tanks, 18 Artillery Systems, 700 Soldiers-1Day; RU Missiles Performing Worse, UKR Electronic Warfare is Working, LIVE UPDATES and MORE

WSJ: U.S., Partners Explore Seizing Russian Assets to Back Loans to Ukraine

Some European officials are wary of plan discussed by U.S. and U.K.

The U.S. and its partners are exploring ways to use some of the $300 billion in frozen Russian central bank reserves to back loans to Ukraine, one of a series of ideas that Western officials are considering as they struggle to agree on a method to seize Russian funds without spooking international investors.

With Congress blocking funding for Ukraine, there is renewed impetus in Washington to find other sources of long-term financial support. After the outbreak of war, billions of dollars in Russian foreign currency reserves, gold and government bonds were frozen across the U.S., Europe and Japan to ensure they weren’t used to fund its illegal invasion.

Pushed by the Biden administration, the Group of Seven democracies is now exploring several ways to confiscate the frozen Russian funds to give to Ukraine, a move that would represent a significant escalation against the Kremlin and that is fraught with legal difficulties.

G-7 officials hope to present options in time for the second anniversary of the invasion in February. But it could take at least another year before anything actually happens, some officials say. There are fissures among Western allies about how best to proceed. While the U.S. and the U.K. back the idea, other European partners, in particular Germany, worry that seizing Russian sovereign assets would backfire, dissuading countries around the world from storing their wealth in the West for fear it might get taken away.

“The G-7 leaders asked that options be developed and the matter be studied, to the extent that there are risks that they’d be evaluated, international law issues studied and so we’re in the process of doing that, but certainly no decision has been made,” Treasury Secretary Janet Yellen said this week.

Nonetheless, the political imperative of using Russian assets to help pay the massive costs of supporting Ukraine and helping it rebuild have become increasingly compelling, European and U.S. officials say. G-7 leaders have already said Russia must pay for the cost of the war.

Ideas under discussion range from taxing the interest payments the frozen assets generate to seizing the funds outright and transferring them to Ukraine, according to people familiar with the talks.

Another idea is using Russian government reserves as collateral for loans to Ukraine. Under this idea, which is still at an embryonic stage, lenders would receive the Russian assets if Ukraine defaults on the loan, potentially issued by an international financial institution such as the World Bank. That could create a financial incentive for Russia to avoid destroying Ukraine’s economy and its ability to pay back its debts, the thinking goes. Another advantage: The underlying collateral could be handed back to Russia if hostilities halted and the seizure needed to be reversed. —>READ MORE HERE (or HERE)

WSJ: U.K. Boosts Military Aid to Ukraine Amid U.S. Deadlock:

European countries have increased support for Kyiv as more U.S. funding hangs in the balance

The U.K. government pledged nearly $3 billion in fresh military support for Ukraine on Friday, the latest example of Europe bolstering aid for the war-torn country as additional U.S. funding hangs in the balance amid deadlock in Congress.

British Prime Minister Rishi Sunak announced the £2.5 billion package, which is £200 million more than the U.K. pledged last year, during a trip to Kyiv. Britain also said it would sign a long-term security-cooperation agreement with Ukraine guaranteeing “swift and sustained” assistance to the country should it ever be attacked by Russia again.

“I am here today with one message: The U.K. will also not falter,” said Sunak in a statement. “We will stand with Ukraine, in their darkest hours and in the better times to come.”

The agreement is a boost for the Ukrainian government, which has struggled to maintain momentum among Western donors as the war approaches a third year with no obvious sign of quick resolution. After repelling Moscow’s assault on Kyiv and seizing back swaths of territory in 2022, Ukraine’s military failed to score decisive victories on the battlefield last year. International attention has shifted to Israel’s war in Gaza and strikes in Yemen. Military and financial-aid packages currently worth over $100 billion are blocked in the U.S. and the European Union amid political disputes.

“The announcement from the U.K. is welcome but it’s never going to be enough to replace the flows of assistance from the U.S.,” said Keir Giles, a senior consulting fellow covering Russia and Eurasia at Chatham House, a London-based think tank. “It’s only a minor uplift on what the U.K. was already providing.”

National Security Council spokesman John Kirby this week said Washington had issued the last drawdown package it had the funding to support. “The assistance that we provided has now ground to a halt,” he said at a White House press briefing on Thursday.

Democratic and Republican lawmakers have less than two weeks to craft a new spending deal to avoid a partial government shutdown while also trying to approve more funds. Republican lawmakers are blocking additional support to Ukraine, demanding changes to U.S. border policy.

Individual European governments are trying to step up to the plate as fears grow that cuts in funding could allow Russia to gain momentum on the battlefield this year. Germany, for instance, has doubled its military assistance for 2024 to €8 billion, the equivalent of $8.78 billion.

Europe now provides more military assistance to Ukraine than the U.S., but the loss of American aid, and its intelligence capability, would be a serious blow to Kyiv’s ability to wage war against Moscow, analysts say. —>READ MORE HERE (or HERE)

Follow links below to +++++relevant+++++ and related stories:

+++++Russia-Ukraine News LATEST UPDATES: (REUTERS) (AP) (NY POST) and (WSJ)+++++

+++++War update: 49 combat clashes on front lines, most attacks repelled in Donetsk region+++++

+++++Russian army loses 5 tanks, 18 artillery systems, 700 soldiers per day – Ukraine’s General Staff+++++

+++++Ukraine’s Air Force on results of Russia’s 13 January attack: Russian missiles are performing worse, Ukrainian electronic warfare is working+++++

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