Janice R. Andrews
Senior EU officials have stated that it is doubtful that the EU will move through with seizing the assets of the Russian central bank that are presently blocked in Europe. The G7 has set a meeting for February to debate the legality of such a move; nonetheless, officials have highlighted legal issues and possible effects on financial stability as primary reasons for caution.
In reaction to Russia’s invasion of Ukraine in 2022, the European Union, the United States, Japan, and Canada jointly froze almost $300 billion in assets held by the Russian central bank. $200 billion of this total is kept in Europe, mostly in the Belgian clearing house Euroclear.
The EU is having difficulty coming to an agreement on a 50 billion euro ($54.36 billion) aid package for Ukraine until 2027, which is why they are reluctant to seize these assets. The standoff has been exacerbated by Hungary’s opposition, headed by Prime Minister Viktor Orban, who has strong links to Moscow.
Redirecting and seizing Russian assets to Ukraine may help ease the financial strain on the West as it supports the war effort in Ukraine. But European officials reject this alternative, saying it carries too much legal danger.
According to a senior EU official with knowledge of the situation, “Confiscation of the Russian assets’ capital is not likely to occur. The member states of the EU cannot agree on this.”
Xavier Bettel, the foreign minister of Luxembourg, issued a warning, emphasising the possibility of political choices going against court orders. “Suppose we make the political decision to award Ukraine billions of dollars. We also have a court ruling stating that we cannot release it to them in six months. Then, who will pay?” In a Reuters interview, Bettel stated.
Vincent van Peteghem, the finance minister for Belgium, stressed the importance of exercising caution, saying, “We should avoid any impact on financial stability.” A different strategy is being considered by officials, in which member states of the European Union would back a proposal put up by the European Commission to seize just the profits from the assets and keep the capital intact. Over a four-year period, this may earn an estimated 15–17 billion euros, which could then be used to bolster Ukraine’s war effort.
The talks take place in the midst of obstacles facing the EU, such as Hungary’s refusal to approve a 50 billion euro ($54.36 billion) aid package for Ukraine until 2027. A delicate balancing act between legal considerations, possible financial hazards, and the ongoing geopolitical dynamics surrounding the Ukraine conflict is reflected in the reluctance to confiscate Russian assets.
