EU discusses confiscation of Russian money for Ukraine again
18 December 09:07
The European Union is once again assessing the legal and financial implications of the possible confiscation of the frozen assets of the Russian central bank for their subsequent transfer to Ukraine. Bloomberg writes about this with reference to sources familiar with the situation, Komersant ukrainskyi reports.
EU foreign ministers discussed this idea at a meeting in Brussels on Monday. The issue could be raised again during the EU leaders’ summit on Thursday, particularly by the Baltic states and Sweden, which are pushing for creative ways to better utilize frozen Russian assets.
U.S. President Joe Biden also continues to encourage the EU, which holds most of the frozen Russian funds, to confiscate them, including during a G7 conversation on December 13.
All of this is happening against the backdrop of the risk that Donald Trump may reduce or stop aid to Ukraine upon his return to the White House.
What are the options?
The EU’s diplomatic service and some member states are currently considering whether court decisions are needed as a legal basis for confiscating frozen assets or whether calculating the damages caused will suffice.
So far, the EU and the G7 countries have used only the profits from frozen Russian assets worth about $300 billion to help Ukraine. According to the G7 plan, Kyiv’s allies have approved a mechanism whereby these profits will be used to secure a €50 billion loan package to Kyiv.
A decision to confiscate these funds and transfer them to Ukraine would be a significant departure from the current approach.
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Who is against
Several member states, including Germany, Belgium and Luxembourg, remain very concerned about the idea of confiscation. Some states are currently assessing how such a move would affect the euro as a currency, as well as the possible consequences of third countries deciding to withdraw their assets from countries that would implement confiscation. In particular, it is known that Saudi Arabia and “Chinese clients” have expressed their reservations against such a step.
The Brussels-based Euroclear Ltd. company, which holds about 180 billion euros of frozen Russian assets, calls for caution regarding the idea of confiscation. Valerie Urbain, CEO of the clearinghouse, warned that the EU would have to assume responsibility for the liabilities associated with the underlying assets, and that the move could provoke a business outflow to competitors in Asia.
The European Central Bank has also repeatedly expressed concerns about this idea.
Russian money abroad
About 260 billion euros of the Central Bank of Russia’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, the United States controls assets worth between $40 and $60 billion, and the United Kingdom controls about £25 billion.
As for the funds of 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. These funds are generally untouchable for the West and there are no discussions about them.
