US readies for showdown as China to shut down bid to pilot $350bn of Russian assets | World | News

US politicians have been proposing to fund the rebuilding efforts in Ukraine with frozen Russian bank assets but have been warned of potential consequences lying behind the corner. US Treasury Secretary Janet Yellen said the move could provoke China into pushing back to avoid the creation of a dangerous precedent threatening its own dollar reserves. Journalist Dominic Lawson noted pushing forward with the proposal would cause “a problem for the dollar” as he also warned UN moves to force Russia to pay for reparations would not succeed.

Speaking to Times Radio, Mr Lawson said: “The West, principally America, froze Russian central bank assets that were in mostly dollar accounts.

“A massive amount, actually, $350 billion, but there is an issue which is, although certain American politicians are saying, ‘well, we can use this to rebuild Ukraine’, the head of the Federal Reserve, Janet Yellen, said this is very dangerous because the Chinese invest in dollars.

“It’s the world’s reserve currency. If they think that when they do something very terrible that we will essentially expropriate them, then that is a problem for the dollar.”

China has been experiencing economic turmoil since the start of the Coronavirus pandemic, with its profit dropping again in recent weeks as new cases surged.

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And protests against Xi Jinping’s zero-Covid strategy have caused the economy to tank again, with Beijing expected to focus efforts on securing its economic assets to avoid a more dramatic drop.

Beijing has also attempted to avoid backlash over its close alliance with Russia, joining G20 countries in condemning Moscow’s actions in Ukraine – albeit pushing not to call the invasion an all-out war.

Efforts have continued across the West to support Kyiv in pushing Russian troops out of its territory by slapping sanction after sanction on Russia as well as providing Ukrainian defences with military equipment.

But Mr Lawson warned efforts to have the UN set up a mechanism to force the Kremlin to pay for rebuilding Ukraine would be moot.

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NATO will pledge this week to support Ukraine long-term as it defends itself against Russian aerial, missile and ground attacks — many of which have struck power grids and other civilian infrastructure, depriving millions of people of electricity and heating.

Secretary-General Jens Stoltenberg said last week: “NATO will continue to stand with Ukraine for as long as it takes. We will not back down.”

Top UN official in Ukraine, Denise Brown, said civilians, many of whom lamented unlivable conditions and feared more strikes to come, continued to pour out of Kherson on Sunday.

Ms Brown said: “The level of destruction, the scope of the destruction, what’s required in the city and in the oblast — it’s massive.”

She added that UN teams have been ferrying in supplies like food, water, shelter materials, medicines, and blankets and mattresses.