Treasury Secretary Janet Yellen. REUTERS./FILE PHOTO

By David Lawder

 – U.S. Treasury Secretary Janet Yellen will call on Tuesday for Europe and the U.S. to stand together against Russian aggression and Iranian “support for terrorism”, including finding a way forward to unlock the value of frozen Russian sovereign assets to aid Ukraine.

Yellen, in excerpts of her planned speech on the transatlantic alliance released on Monday, said U.S. and European support for Ukraine has been essential for Ukraine’s resistance to Russia’s invasion.

“And let me be clear: It is also critical for the security of the American and European people,” Yellen said in the excerpts. “If we stand by as dictators violate territorial integrity and flout the international rules-based order, they have no reason to stop at their initial targets. They will keep going.”

She also said that the U.S. and Europe must show that Russia cannot outlast their resolve to defend a rules-based order that took them decades to shape.

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This includes the need to crack down on Russian sanctions evasion and provide Ukraine the funding to equip its military, fund critical government services and ultimately rebuild once the conflict ends, Yellen said.

“That’s why I believe it’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen said. “This will be a key topic of conversation during G7 meetings this week.”

Finance leaders from the Group of Seven industrial democracies are meeting in Stresa, Italy later this week, and Yellen is pushing for them to agree on a plan to use the income stream from some $300 billion worth of frozen Russian sovereign assets to back a larger loan to Ukraine.

Proponents of the plan say this could provide up to $50 billion up front for Ukraine without confiscating the assets instead of about $3.5 billion a year in interest earnings.

The U.S. Congress has passed legislation to authorize the full confiscation of the frozen Russian assets largely held in Europe, but Moscow has vowed retaliation and EU officials have opted for a more conservative plan to put the assets into a military and civilian aid fund for Ukraine.

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Yellen’s remarks on Tuesday will be delivered at the Frankfurt School of Finance and Management, where she will receive an honorary degree in economics. She also will meet on Tuesday with leaders of European banks to discuss macroeconomic trends and combating illicit finance.

Yellen also said in the excerpts that Europe and the U.S. have acted “decisively” to impose sanctions on Iran for its “support for terrorism” in the Middle East and its proliferation of drones and missiles used in the Gaza and Ukraine conflicts and should continue to do so.

“We’ve also been jointly committed to providing critical humanitarian aid to Palestinians in Gaza,” she said.

Her excerpts did not mention the death of Iranian President Ebrahim Raisi in a helicopter crash on Sunday.

Yellen added that the U.S. and Europe are also collaborating closely on investment screening for national security purposes, noting that 22 EU countries have passed legislation related to investment screening.

Yellen has also agreed to help Mexico beef up its own screening of foreign investments, but insists that this is not motivated by concerns about investments by China.

“This matters, as our collective national security is greatly enhanced when our partners and allies have and use their own robust investment screening mechanisms,” Yellen said.

(Reporting by David Lawder; Editing by Susan Fenton)

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