Western countries offer to transfer to Ukraine the assets of the Central Bank of the Russian Federation frozen in the European Union as an "advance" of compensation for war damage.
This is reported by the Financial Times.
The idea has gained traction in recent weeks as the US and EU battle for political approval of new funding packages for Ukraine worth tens of billions of dollars. However, experts warn that it carries legal and economic risks.
According to the document of the European Commission, with which the editors of the publication got acquainted, last year about €260 billion of assets of the Russian Central Bank were seized in the countries of the "Big Seven";, the European Union and in Australia.
Approximately €210 billion of cash and government bonds are held in the EU. At the same time, the US froze only a small amount of Russian state assets — approximately $5 billion.
About €191 billion of assets seized by the European Union are held by Euroclear, the worldʼs largest securities depository headquartered in Belgium. France has frozen nearly €19 billion, while Germany holds roughly €210 million.
In the United States, asset confiscation was not publicly supported, but American officials call the method a "countermeasure" that fully complies with international law and "will encourage Russia to stop its aggression."
This step was called a "legitimate response to the illegal invasion of the Russian Federation", it can be carried out by countries that suffered from Russian aggression, including allies of Ukraine, which during the war financially supported the army and economy of the state.
American officials believe that the confiscated assets can be transferred to Ukraine in tranches, for example, through the World Bank or the European Bank for Reconstruction and Development.
However, the idea of confiscating Russian assets threatens legal consequences, since the frozen reserves of the Central Bank of the Russian Federation are protected by international law. Any move with them would show countries like China or Saudi Arabia that their assets held in euros or dollars may not always be safe.
European officials are afraid of the consequences, because most of the frozen assets are in the EU. According to one of the senior officials, the European Union has something to lose.
The EU is working on a "backup" plan to collect the profits Euroclear receives from frozen Russian assets. Belgiumʼs central depository earned about €3 billion last year from reinvesting earnings from securities that cannot be paid out to Russia. However, even such a proposal turned out to be controversial and caused concern.
- On September 7, the United States announced that for the first time it would transfer the confiscated assets of Russian oligarchs to Ukraine. We are talking about $5.4 million, which will go to support Ukrainian veterans. After that, Estonia announced that it plans to become the first country in the EU to transfer confiscated Russian assets (approximately €38 million) to Ukraine. In October, the Estonian government approved the use of frozen Russian assets to help Ukraine.