Be Ready for the U.S. Congress to Abandon Ukraine Funding – and Possibly for 'NATO Joe' Biden to Press the Big, Red Button and Put Frozen Russian Assets to Work

The Fewer the Remaining Options to Fund Ukraine’s Fight for Freedom, the More Obvious the Choice to Sledgehammer Putin’s Sovereign FX Piggy Bank to Pay for ATACMS, Patriots, Javelins, Bradleys & More

After yesterday’s failed U.S. Senate cloture vote — or failing to get 60 yeas to end debate on bill — that has frozen Congress’s ability to advance a package containing Ukraine, Israel, and U.S. border security funding, we should expect as a base case that no meaningful Ukraine funding will make it to President Biden’s desk. At all. Until possibly January 2025. Or maybe never. All that does is increase the chance that Old “NATO Joe” Biden will take the path that’s been available to him physically and legally since the war began: claim seized Central Bank of Russia (CBR) assets held in the U.S. and EU and use them to pay for the war effort — if he can get his own cabinet on board.

Besides the current Congressional Republican obsession with blocking Ukraine aid, the topography of the political playing field in Washington isn’t helpful either. As I said earlier this autumn, I doubt Ukraine aid will be bundled with Israel aid — but in the end that won’t even matter, as now a slapdash container of border security and immigration reform amendments has been bolted to the Ukraine issue. That keeps Senate and House Democrats away from passing the conjoined issues, which leaves Ukraine in the lurch. Not only is Ukraine in acute need of the funding in order to secure new weapons deliveries for 2024, but the topography in D.C. gets worse from here on out.

One reason is the impending battle on another U.S. government shutdown. That issue has been punted to late-Jan./early-Feb. 2024 (depending on the funding bills’ committee of jurisdiction) and could very likely end in more continuing resolutions that extend out until after the November 2024 elections. Congress sometimes doesn’t like putting its name on any large spending packages in an election year — the two government shutdowns in 2018 painfully forced home that point — so the best we might get is a “minibus” appropriations package that funds the government and possibly Israel through end-2024, with the contentious Ukraine funding left out.

And if it wasn’t border security, Republicans would find another political time bomb to chain around Ukraine’s neck — it’s just about obstructionism over an issue that is of grave importance to the safety and economies of U.S. allies. If I were a more cynical person, I might say that the Senate and House Republicans that don’t see Ukraine as a major national security issue may very well want Russian forces threatening NATO and EU members like Finland, Poland, Czechia and others. The global market/macroeconomic risk from Putin’s troops threatening and trying to force negotiations with more European governments in 2024 may result in a commodities-price spike so brutal that the resulting shock-inflationary pressures that followed would sink Biden’s 2024 chances in an already close race against (presumably) Trump.

Therefore I’m not sure that pro-Putinn Republicans in either chamber would support Ukraine aid even if immigration and border funding were already decided. The potential political payout to them for being obstructionist — which they will be anyways to keep their names off of big spending votes and also to peacock for Trump — is so high that they have to try to put their fingers on the scales now, and keep them there until global markets traders’ fear of Putin-on-the-march quickly translate into U.S. inflation data that kills Biden’s 2024 chances.

There’s a small problem with that. The U.S. and EU already have all the money they need to buy weapons, and it’s sitting there disguised as frozen CBR funds. European financial institutions hold the bulk of the roughly $300 billion, but they won’t move unless the U.S. does first. The legality of the move is subject to some pretty weak points of debate from the “con” side, considering that the U.S. president is already empowered to act by precedent. One can read some polemics stating the “pro” case here (Lawrence Tribe, Harvard Law); here (Larry Summers, former U.S. Treasury Secretary); and here (Timothy Ash, RBC BlueBay Asset Management/Chatham House).

Now just because the U.S. can and should spend the CBR’s foreign reserves and provide both: 1) legal cover, and 2) an actual coalition built on consensus to encourage others to do the same doesn’t mean that it will. I’m would almost bet that two names close to Biden are lobbying against this plan so as not to upset the international apple cart. Those names, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan, are probably still filled with fear by the same claptrap myths about expropriating the reserves that have been around for nearly two years. They fear destabilizing Russia and angering Putin — two ships that have long since sailed, and over which they have no control. If it’s about fear of retribution and watching Russia seize U.S. and EU assets in Russia, too late, it’s already happening.

Regarding that point — why worry about losing assets that one would just reclaim in a year or two anyways when Russia is broke and Putin gets rolled by consiglieres that have seen enough? Are U.S. companies from the Yale list of firms still doing business in Russia crying to the White House in advance? It comes back to whether the U.S. wants to or has a plan to help win this war or not. We already know how “Jake the Brake” feels about this, what with his gun-shyness wrought by the trauma of Clinton’s failed 2016 bid. Which means he and Blinken should act now or resign. Responding to another defeatist point that I hear parroted — that the U.S. shouldn’t come across as too deeply involved in Ukraine’s defense, I say come off it. Russia has been using the trope that it’s really fighting the U.S. — not Ukraine — since March 2022, when I was hearing it on the streets of Moscow. The U.S. and EU aren’t in this to placate the Russian public, but to free Ukraine. After almost 700 days of “WWI, only this time with drones,” it’s time to act like it.

In short, I don’t think U.S. Congress will be the path by which America supplies more military and civilian aid. I also don’t have much faith in Blinken and Sullivan to sign off on something that could so drastically and swiftly change the course of the war in Ukraine’s favor — simply because:
1) they are addicted to the status quo and want to be seen as following the rules of detente;
2) they fear having to handle a destabilized Russia that will require significant international commitment to rid itself of Putin and United Russia kleptocrats; and,
3) don’t want a stain on their legacies should something go wrong.

Keep your eyes on the Eurasianology Substack for a more detailed exercise in myth-busting the claims that the U.S. and EU can’t seize and use CBR assets, including that which dictates that China and others would dump their U.S. Treasury holdings, and more on the psychological effect on the Russian economy/ruble of seeing one’s very own dictator’s piggy bank smashed and raided for the good of one’s faux enemy.