- European allies consider using $300 billion in frozen Russian assets for Ukraine’s recovery.
- The assets were frozen after Russia’s full-scale invasion in 2022.
- Poland, the UK, and Baltic states support seizing the assets for Ukraine’s compensation.
- France, Germany, and Belgium caution against asset seizure due to legal and economic risks.
- Legal experts debate the legitimacy of confiscating assets under international law.
The frozen assets mainly consist of short-term government bonds held by Russia’s central bank. Most of these bonds have matured and turned into cash. Currently, around 210 billion euros are stored in European Union states, with 183 billion euros at Euroclear in Belgium.
The G7 nations have not directly confiscated the funds. Instead, they’ve used the accrued interest to finance aid to Ukraine. This method has provided over $50 billion in assistance, borrowing against the future interest income from the frozen assets.
Europe Divided Over Seizing Russian Assets
Several European countries, including Poland, the UK, and the Baltic states, are pushing for a bold approach. Specifically, they want to seize up to $300 billion in frozen Russian assets. They argue that Russia’s aggression has caused immense damage to Ukraine.
Seizing these assets could help finance Ukraine’s reconstruction. The World Bank estimates rebuilding will cost around $524 billion over the next decade, which surpasses the total value of the frozen Russian assets. Thus, the seized funds could play a crucial role in Ukraine’s recovery.
In response to US President Donald Trump’s statements, some European nations feel increasingly pressured. Trump suggested Europe should handle its own security. As a result, these countries are considering increasing their financial support for Ukraine.
However, countries like France and Belgium face significant debt burdens. Therefore, opposition to the asset seizure is strongest in these nations. Their leaders warn that such a move could set a dangerous precedent and destabilize European financial markets.
Legal Debate: Is Asset Confiscation Legal?
The legality of seizing Russian assets has divided legal experts. Some argue it would be a legitimate “countermeasure” under international law. Nigel Gould-Davies, a senior fellow at the International Institute for Strategic Studies, supports this, suggesting it would be a valid response to Russia’s violations.
On the other hand, Ingrid Brunk, a professor at Vanderbilt University, warns against it. She argues that international law strongly protects central bank reserves from seizure. Brunk believes ignoring this rule would create a dangerous precedent and destabilize the global financial system.
Frozen Assets and International Conflicts
In the past, frozen state assets have been used to compensate victims of international conflicts. For example, assets were seized from Iraq after its 1990 invasion of Kuwait and from Iran following the 1979 US Embassy hostage crisis. These actions had legal support.
However, the situation with Russia is different. While some scholars argue Russia’s actions justify asset seizure, there is no international agreement. This lack of framework makes the case more complex and harder to justify legally.
Russia Responds to Calls for Asset Seizure
Russia has consistently condemned the idea of seizing its assets, arguing it violates international law. Kremlin spokesperson Dmitry Peskov has warned that such actions would lead to severe legal consequences. Additionally, he emphasized that it would damage international trust in financial institutions.
In response, Russia has passed laws that allow the government to seize assets of foreign companies operating within the country.
Despite these warnings, the value of foreign assets in Russia has already decreased significantly. Since the invasion, many Western companies have either left or scaled back operations, resulting in $170 billion in losses.
Meanwhile, European leaders continue to weigh the pros and cons of seizing Russian assets, but the debate remains unresolved. While some countries push for stronger action, others urge caution due to legal and economic risks.
Ultimately, the outcome will depend on further negotiations, legal interpretations, and the evolving political situation surrounding Ukraine’s reconstruction and the ongoing conflict with Russia.