WASHINGTON — Treasury Secretary Janet Yellen was pushed by legislators from both sides of the aisle Wednesday to strengthen moves to cut off financial links with Russia, and was queried on the Biden administration’s readiness to impose sanctions on China in the event it moved aggressively toward Taiwan.
In a three-plus hour hearing at the House Financial Services Committee, Yellen got an earful of concerns — and voiced many of her own — about the two largest global rivals to the U.S.
The Treasury chief said U.S. officials wouldn’t take part in some Group of 20 meetings this year if Russia were allowed to participate. A spokesperson later clarified that she was referring to a gathering of finance ministers scheduled for this month in Washington.
“I’ve made clear to my colleagues in Indonesia that we will not be participating in a number of meetings if the Russians are there,” Yellen told lawmakers.
Yellen responded somewhat positively to a proposal from Republican Rep. Andy Barr of Kentucky to create an escrow account for proceeds from Russian oil and gas sales. She called it “worth exploring” as the U.S. and its allies seek ways to tighten sanctions on Russia amid its ongoing invasion of Ukraine.
“We have a way for Russia to sell oil and gain proceeds in the form of a general license,” Yellen told Barr. “But the license is temporary, it will expire. We need probably a better mechanism. It is a constructive suggestion that we could work with you on.”
Yellen also made clear the Biden administration would be prepared to use all its sanctions tools against China if Beijing moved aggressively toward Taiwan.
“We’ve shown we can” impose significant pain on aggressive countries, as evidenced by sanctions against Russia, Yellen said. “You should not doubt our ability and resolve to do the same in other situations.”
In her prepared remarks, Yellen warned that the war in Ukraine threatens to inflict “enormous economic repercussions” globally, and touted the vital support of lenders including the International Monetary Fund and World Bank.
In answering questions, Yellen defended the practice of IMF surcharges — commissions charged to countries that use the lender’s credit lines extensively but have been criticized by some Democrats, who say that they force vulnerable nations to divert money needed for fighting the COVID-19 pandemic.
The surcharges are part of the fund’s risk-mitigation framework and critical to protecting IMF resources, Yellen said. The IMF and World Bank will play a key role in helping Ukraine withstand Russia’s invasion, and it’s important for the institutions to have the resources that they need, she said.
