There has been a hot topic in various capitals for months, and now Washington is putting its foot on the gas: It is getting ready to unfreeze about $60 billion in Russian assets and hand them over to Ukraine. Billions of dollars more in Russian assets are held by the European Union, signaling more time-consuming twists and turns, but this peculiar game of international fiscal gymnastics is definitely on. 

This is a separate issue from the new $54 billion aid package that the EU agreed on Thursday to provide Ukraine — indeed, there is in the long run more money at stake. 

In America, the Foreign Relations Committee passed, in a 20-to-1 vote, the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act. If the bill passes the Senate and House and is signed into law by President Biden, it would “pave the way for Washington’s first-ever seizure of central bank assets from a country with which it is not at war,” Reuters reported last month.

It is not for love of arcane banking procedures that this is going on. Rather, Mr. Biden wants to shake up the cocktail of impatience and pessimism about the future of a war that is heading to its two-year mark with no end in sight. According to World Bank estimates, Ukraine would need at least $400 billion to get back on its feet.

The president reckons that money parked over the years by Russian companies and oligarchs in American banks and investment funds should be allocated to the reconstruction of Ukraine’s infrastructure. Attorney General Garland has said that “we are exercising new authority granted by Congress to transfer certain assets that we have seized from Russian oligarchs for use in rebuilding Ukraine.”

The new initiative is said to be viewed favorably by Canada and Britain. The view from Brussels is less clear. For many in Europe, Mr. Biden’s move represents a breach of international law and, in theory, deals a blow to the credibility of the American financial system.

It is true that some Russian assets got blocked immediately after Russia invaded Ukraine in February 2022. Few seriously thought it would be possible to seize them and use them to finance the Ukrainian war effort. Until last year, even Secretary Yellen cast doubts on the feasibility of that, citing legal obstacles.

The European Union is still unconvinced about the viability of the plan. That is no small matter, given that most of the Russian wealth that has been transferred abroad — north of the equivalent of $250 billion — is found not on Wall Street but in European credit institutions and trusts in countries including Belgium, the Netherlands, Malta, and Cyprus. 

The German newspaper Die Welt reported in the spring of last year that the European Commission concluded that from a legal point of view, the frozen assets of the Central Bank of Russia cannot be handed over to Ukraine by means of a simple transfer. So the commission proposed an alternative: investing the frozen Russian assets in European government bonds and then using the interest earned to provide assistance to Kyiv. 

What the status of that unofficial proposal is and how it could dovetail with the REPO Act may not be clear for some time.  The theme is likely to be at the center of many discussions at the G7 summit in Italy in June. 

One countervailing factor is the rise of Brics and the growing recognition that as Washington and the West move to decouple  Russia from their economies, Moscow has other options. As a measure of how tricky this gets, the IMF has just raised Russia’s growth outlook as the war seemingly boosts its economy, the Financial Times reports.

Mr. Biden is on the back foot, struggling to keep up with his pledge to support Ukrainian resistance. Republican lawmakers, though not all of them, are opposed to the $60 billion aid package that is still stuck in Congress. It’s against this backdrop that the White House seeks to send a signal to President Putin that Mr. Biden does mean business.

So on Wednesday at Kyiv, the undersecretary for foreign affairs, Victoria Nuland, discussed with Ukraine’s foreign minister, Dmytro Kuleba, not only security assistance but also the use of frozen Russian assets. Those talks reportedly went well.