War

Europe has invented a new scheme: frozen Russian funds as security guarantees

Major European countries are still discussing the possibility of confiscating more than 200 billion euros of frozen Russian assets. However, they are considering this step in the context of a potential ceasefire agreement in Ukraine, Komersant ukrainskyi reports citing the Financial Times.

According to the newspaper, France and Germany, which previously opposed such a decision, are now actively consulting with the UK and other partners on possible ways to implement this plan.

According to sources familiar with the negotiations, French officials are expressing the idea of seizing Russian assets if Moscow fails to fulfill the terms of a future peace agreement. This approach is seen as one of the mechanisms to guarantee security for Ukraine. Supporters of this initiative are convinced that linking frozen assets to Russia’s implementation of the agreements could become an important lever of influence.

Although Kyiv, Poland, and the Baltic states have long insisted on the complete confiscation of Russian assets, Berlin, Paris, and Brussels have previously refrained from doing so, fearing possible consequences for international law. Also among the arguments against is the European Central Bank’s concern that such actions could undermine the euro’s status as a stable reserve currency.

Meanwhile, political leaders are beginning to reconsider their positions. French President Emmanuel Macron, discussing the issue with Donald Trump, said that the immediate seizure of assets may be against international law, but that the funds could play a role in negotiations to end the war. In Germany, the future Chancellor Friedrich Merz does not rule out the possibility of supporting asset confiscation. He is expected to discuss this issue with current Chancellor Olaf Scholz on the eve of the EU summit. Scholz’s press service has so far refrained from commenting.

In the United Kingdom, Prime Minister Keir Starmer also confirmed that London is exploring the possibility of using frozen Russian funds. He acknowledged that this is a complicated issue, but emphasized the need to actively seek options for their use.

According to sources, the French proposal was generally well received by European partners, although a final decision is still far off. An additional argument in favor of the confiscation was the Trump administration’s statements about a possible reduction in military support for Ukraine. According to the confiscation supporters, this increases the need for new mechanisms of pressure on Russia.

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Russian money abroad

About 260 billion euros of the Central Bank of the Russian Federation’s assets have been frozen in the form of securities and cash in the jurisdictions of the G7 member states, the EU and Australia, with more than two-thirds of them frozen in the EU. belgium controls €190 billion of assets in euros, the United States controls assets worth between $40 and $60 billion, and the United Kingdom controls about £25 billion.

Currently, the income from these assets is used to cover loans to Ukraine, but the funds themselves remain untouched.

As for the funds of private individuals, the American think tank Atlantic Council claimed at the beginning of the full-scale war that Russians had about $1 trillion of “dark money” abroad. According to a 2020 report, a quarter of this amount is controlled by Putin and his oligarchs. This money is generally off-limits to Ukraine’s Western partners.