Yellen in surprise visit to Kyiv to reaffirm US economic aid to Ukraine

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By Rod Nickel

KYIV (Reuters) -U.S. Treasury Secretary Janet Yellen paid a surprise visit to Kyiv on Monday to reaffirm U.S. support for Ukraine in its struggle against Russia's invasion and promote U.S. economic aid that is bolstering Ukraine's war effort.

Yellen met with President Volodymyr Zelenskiy, Finance Minister Serhiy Marchenko and other key government officials just days into the war's second year, repeating U.S. assurances delivered by President Joe Biden a week ago in Kyiv.

"America will stand with Ukraine as long as it takes," Yellen, flanked by sandbags at the cabinet ministers' office, told Ukrainian Prime Minister Denys Shmyhal, in a trip also aimed at shoring up support at home for continued aid.

In a private meeting with Zelenskiy late in the afternoon, the Treasury chief aid she commended him "for his leadership and resolve in the face of Russia's illegal and unprovoked war."

Yellen said she welcomed Zelenskiy's actions to strengthen governance and address corruption - actions needed to ensure that U.S. economic aid is being spent responsibly, a message she repeated in her meeting with Marchenko.

"The United States has been powerfully supporting us since the first days of this war not only with weapons, but also on the financial front," Zelenskiy said on his Telegram social media channel.

"It is necessary to further strengthen sanctions to deprive Russia of the ability to finance the war."

In public remarks, Shmyhal said he and Yellen discussed additional sanctions on Russia, including confiscating frozen Russian assets to benefit Ukraine's recovery.

But Yellen told reporters in a phone briefing that there were still significant legal obstacles to fully seizing some $300 billion in Russian frozen central bank assets and expressed caution about new curbs on Russia's nuclear energy sector.

Yellen announced the transfer of the first $1.25 billion from the latest, $9.9 billion tranche of economic and budget assistance from Washington.

AIR RAID SIREN ON ARRIVAL

Yellen's visit comes a week after Biden staged an unannounced trip to Kyiv and promised $500 million in additional military aid for Ukraine and new sanctions on Russia announced days later, including effectively banning U.S. imports of Russian aluminum.

As Biden did, Yellen's staff worked to keep the visit a secret until she left Kyiv, with a daily media advisory for Monday saying only that she would "meet with advisors and staff."

She traveled into Kyiv via an overnight train with a small group of senior aides after landing in a U.S. military aircraft near Rzeszow, Poland, near Ukraine's western border, and left again by overnight train after a full day of meetings.

Shortly before her arrival in the capital, city air raid sirens wailed as a warning of a possible attack, although they often turn out to be false alarms.

On a chilly morning, Yellen laid a wreath at a memorial wall for Ukrainian soldiers killed in the war, saying: "I am witnessing first-hand the devastating toll of Putin's brutal war."

She stopped to inspect a destroyed Russian tank and mobile artillery piece on display at a city square cleared of visitors and met with first responders from the city's emergency services.

BUDGET SUPPORT

Yellen visited Kyiv on her return to Washington from a G20 finance leaders meeting in Bengaluru, India, where she urged counterparts to boost economic aid to Ukraine and insisted that G20 ministers issue a strong condemnation of Russia's invasion.

Since the war began, the U.S. has given Ukraine more than $13 billion in economic and budget support funding, and the latest disbursement will push that to over $14 billion, with an additional $8.65 billion expected through Sept. 30.

Yellen and Treasury officials viewed the trip as a key way to reinforce the importance of sustaining economic and budgetary assistance for Ukraine to the American public, a Treasury official said, amid signals from some Republican lawmakers that they are growing skeptical.

Ukraine is estimated to need $40 billion to $57 billion in external financing this year to support its economy and is negotiating a $15.5 billion loan program with the International Monetary Fund to partly fill the gap.

Yellen told Marchenko she backed completion of a fully financed program for Ukraine with the IMF by the end of March, Treasury said in a statement.

Yellen said such economic support is keeping Ukraine's government and critical public services running, schools open and pensions paid, providing a "bedrock of stability" that fuels Ukrainian resistance.

"A sustained military effort cannot succeed without an effective government at home," Yellen said at the Kyiv Obolon School No. 168, where the salaries of teachers, administrators and support staff are reimbursed from U.S. budget support funds.

A chalkboard at the school, damaged in Russia's initial assault on the capital last year, read "Crimea is Ours," next to one with "2+2=4."

(Additional reporting by David Lawder and Andrea Shalal; Writing by David Lawder; Editing by Mike Collett-White and Marguerita Choy)