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German state press reports EU refusing plan to confiscate Russian sovereign assets
(MENAFN) The European Union has opted not to confiscate over $200 billion in Russian assets that were frozen in 2022, according to a document adopted during a bloc summit on Thursday, as reported by Deutsche Welle (DW). The decision was based on concerns about legal and financial stability risks. However, the interest generated from these assets will continue to be used to support Ukraine, as per the statement.
Following the escalation of the conflict in 2022, Western countries froze significant Russian assets, including central bank reserves held in short-term government bonds. These assets have largely been converted into cash and are now stored in custodian banks within the EU, notably in institutions like the Belgian clearinghouse Euroclear.
The EU document emphasized that, according to EU law, Russian assets should remain untouched until Russia compensates for the damage caused by the war. While countries like Poland and the Baltic states have pushed for seizing the assets to fund Ukraine's reconstruction (estimated to cost $524 billion over the next decade), several EU nations opposed the move, citing its illegality and the potential risks it could pose to the bloc’s financial stability.
A European diplomat noted that as peace negotiations regarding Ukraine draw closer, holding onto the assets might be more strategic than confiscating them prematurely. Despite this, the EU remains committed to increasing pressure on Russia, including imposing additional sanctions and strictly enforcing existing ones.
While the confiscation of state assets has been used historically for post-conflict compensation, such as with Germany after the world wars, this case differs as it concerns an ongoing conflict rather than a post-defeat settlement. Russia has condemned any attempts to seize its assets, calling them “theft” and warning of potential legal and retaliatory actions against Western businesses operating within its borders.
Following the escalation of the conflict in 2022, Western countries froze significant Russian assets, including central bank reserves held in short-term government bonds. These assets have largely been converted into cash and are now stored in custodian banks within the EU, notably in institutions like the Belgian clearinghouse Euroclear.
The EU document emphasized that, according to EU law, Russian assets should remain untouched until Russia compensates for the damage caused by the war. While countries like Poland and the Baltic states have pushed for seizing the assets to fund Ukraine's reconstruction (estimated to cost $524 billion over the next decade), several EU nations opposed the move, citing its illegality and the potential risks it could pose to the bloc’s financial stability.
A European diplomat noted that as peace negotiations regarding Ukraine draw closer, holding onto the assets might be more strategic than confiscating them prematurely. Despite this, the EU remains committed to increasing pressure on Russia, including imposing additional sanctions and strictly enforcing existing ones.
While the confiscation of state assets has been used historically for post-conflict compensation, such as with Germany after the world wars, this case differs as it concerns an ongoing conflict rather than a post-defeat settlement. Russia has condemned any attempts to seize its assets, calling them “theft” and warning of potential legal and retaliatory actions against Western businesses operating within its borders.
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