By Patricia Zengerle
WASHINGTON (Reuters) -A U.S. Senate committee approved legislation on Wednesday that would help set the stage for the United States to confiscate Russian assets and hand them over to Ukraine for rebuilding after the destruction of the nearly two-year-long war.
The Senate Foreign Relations Committee voted 20 to 1 in favor of the unprecedented "Rebuilding Economic Prosperity and Opportunity (REPO) for Ukrainians Act."
If it were to pass the full Senate and House of Representatives and be signed into law by President Joe Biden, as expected, the act would pave the way for Washington's first-ever seizure of central bank assets from a country with which it is not at war.
Senator Ben Cardin, the Democratic foreign relations committee chairman, was optimistic about the bill becoming law, noting that it has broad support, from both Democrats and Republicans in the Senate and House, as well as from Biden's administration.
"Ukraine is on the verge of being overrun by Russia if we do not give them the help that they need... and we all know that it will not end with Ukraine," he said, before the committee voted.
The one "no" vote on the panel came from Republican Senator Rand Paul.
The House Foreign Affairs Committee has passed a similar bill, also with overwhelming bipartisan support. Cardin said he expected the Democratic-majority Senate and Republican-majority House would be able to resolve the differences between the two bills.
The EU, United States, Japan and Canada froze some $300 billion of Russian central bank assets in 2022 when Russia invaded Ukraine. Only about $5 billion to $6 billion are in the United States, with most held in Europe, and most of those in Belgium's Euroclear central securities depositary.
'A BIG HAMMER'
The bill's backers acknowledged the groundbreaking nature of the legislation, but noted the seriousness of what Russia has done.
"This is intended to be a big hammer. It's intended to be a very new way of attacking a country that does not behave itself," Republican Senator Jim Risch said before the vote.
U.S. and British officials have been working to jumpstart efforts to seize confiscated Russian assets and hope that Group of Seven leaders will issue a strong statement when they meet in late February, around the second anniversary of Russia's invasion of Ukraine.
G7 leaders have long argued that Russia is obligated under international law to end its war and pay for the damage it has caused, which already exceeds $400 billion dollars, according to the World Bank.
Senior European Union officials said on Tuesday that the bloc was unlikely to confiscate Russian central bank assets frozen in Europe, despite G7 plans to discuss the legality of such a move at a meeting in February.
European officials are concerned not only with the legality of such an unprecedented confiscation, but also with the potential consequences for the euro currency. Investors might pull out of euro assets out of concern their money might one day be seized too.
Moscow has condemned the effort, pledging to retaliate by confiscating Western assets in Russia, which some reports put at $288 billion.
The REPO Act says any seized Russian funds would be used to rebuild Ukraine. It is separate from Biden's request for $61 billion in security assistance for Ukraine.
That request has been stalled in Congress for months, as Republicans insist the aid must be coupled with unrelated changes to how the country handles immigration via the border with Mexico.