(Bloomberg) -- US President Joe Biden wants the Group of Seven nations to make progress on plans to tap frozen Russian sovereign assets to help support Ukraine by the time the leaders meet in June, according to people familiar with the matter.

G-7 officials have been discussing options to use the $280 billion of immobilized Russian Central Bank assets, including using the money as collateral to raise debt or issuing guarantees against the frozen funds, said the people, who spoke on the condition of anonymity.

The debate comes as Ukraine faces a critical shortage of artillery and other ammunition while allies struggle to source supplies at speed, and as $60 billion of economic aid remains stuck in the US Congress. Biden has also privately told allies, according to people briefed on recent talks, that if Ukraine falls, he believes the international order will be upended for at least the next five decades.

The allies all concur that the funds should remain off-limits from Russia unless it pledges to help with Ukraine’s reconstruction, but they’re at odds over whether it would be lawful to seize them outright. G-7 leaders are due to meet in Italy in June.

A spokesman for the White House National Security Council declined to comment.

Biden would like to see the frozen assets used to help fund Ukraine’s budget needs, and later toward Ukraine’s reconstruction, said the people. The president doesn’t think using the frozen funds replaces the need for aid, one of the people said.

The US view is that it’s not right that Russia gets to decide when to compensate Ukraine for the damage it has caused, according to the people.

France and Germany, along with the European Central Bank, have so far resisted taking any path that would lead to the funds being seized. They worry about Russian retaliation targeting European assets there, and also the potential impact on financial stability and the euro’s status as a reserve currency, Bloomberg previously reported.

Treasury Secretary Janet Yellen and others have downplayed most of those concerns. In Brazil this week, Yellen said the G-7 should work together to explore seizing the assets themselves, or using them as collateral to borrow from global markets.

The UK and Canada are also in favor of seizing the assets, according to one of the people.

One challenge is that the vast majority of the funds are in Europe, mostly held through the Belgium-based clearing house Euroclear, and any agreement will need the backing of all G-7 nations. Another challenge is finding an option deemed by all allies to be legally sound and that helps mitigate any risks to the euro.

Separately, the EU is slowly making progress on plans to at least apply a windfall tax to the profits generated by the immobilized funds. Last year the assets enabled profits of $4.8 billion.

On Wednesday, European Commission President Ursula von der Leyen suggested using those proceeds to fund weapons for Ukraine.

Russia has threatened to retaliate if Ukraine’s allies move on the assets and has explored options to stall any effort to seize the funds. 

©2024 Bloomberg L.P.