EU countries discuss the possibility of confiscating €200 billion of frozen Russian assets: who supports it

After the European governments were excluded from the negotiations between the US and Russia to end the war in Ukraine, the EU has increasingly begun to discuss the confiscation of Russian sovereign assets that were frozen after the start of the full-scale invasion of Russia. This was reported by Politico, according to UNN.

Details

About €200 billion of Russian assets are held in accounts in Europe, mostly in the Brussels-based Euroclear financial institution, which earns interest.

The seizure of Russian assets is seen as a radical step that could guarantee Europe a more prominent seat at the international negotiating table, especially after it was excluded from the latest US-Kremlin talks in Saudi Arabia.

However, there is no unanimity on this issue within the EU. As finance ministers and central bank governors prepare for the G20 summit in South Africa, European governments are weighing the risks. 

Against the backdrop of a possible change in the US position on supporting Ukraine, the Baltic states and Northern Europe are pushing for the confiscation of Russian assets and their transfer to Kyiv. They believe that this will compensate for the potential reduction in aid from Washington and strengthen Ukraine’s position on the battlefield.

“[With the frozen Russian assets] we can replace the US support if the US does decide not to support Ukraine anymore,” Estonian Foreign Minister Margus Tahkna said on Monday.

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“We have 300 billion euros worth of frozen Russian assets in Europe, and we need to use them,” Tsakhkna told reporters in Brussels, along with his counterparts from Denmark, Sweden, Lithuania and Latvia. (Although the exact amount of frozen Russian assets in Europe is unknown, it is generally believed to be closer to 200 billion euros than 300 billion euros.

The Baltic states and Northern Europe believe that the money should be transferred to Ukraine immediately. This position is supported by Poland, the Czech Republic and the EU’s chief diplomat, former Estonian Prime Minister Kaja Kallas.

“I don’t accept the argument that it is legally problematic… we need the political will to do it,” Lithuanian Foreign Minister Kęstutis Budrys told POLITICO. He also added that skeptical capitals should present more compelling arguments for their position.

France, Germany, Italy, Spain, and European Commission President Ursula von der Leyen oppose direct confiscation of funds, as they believe it could harm the EU in its negotiations with Russia and undermine the confidence of international investors. 

“If you unfreeze [the assets] and hand them over to Ukraine, you wouldn’t have them anymore and you wouldn’t be able to use them as a bargaining chip,” said one EU diplomat who opposes unfreezing the assets. 

During a meeting with Trump in the Oval Office on Monday, French President Emmanuel Macron insisted that Western allies could legally use the proceeds of assets during the war, but insisted that it would be illegal to seize the reserves themselves. However, he noted that freezing them provides important leverage.

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“This is part of the negotiations after the war,” he emphasized.

One of the main reasons for the EU’s reluctance to unfreeze Russian assets is the possibility of using these funds as an instrument of pressure on the Kremlin.

After meeting with Russian Foreign Minister Sergei Lavrov in Riyadh last week, US Secretary of State Marco Rubio suggested that the EU would have to take part in peace talks “at some point” because of the sanctions it has imposed on Russia.

European countries recognize that billions of euros of frozen Russian assets give them additional influence over the Kremlin.

“If they [Russia] really want to return the money, they will have to give something in return,” the EU diplomat quoted above said.

While Estonia’s Tahkna supports handing over the money to the accused directly to Kyiv, his government has recognized the advantage of holding on to the funds as leverage. 

According to media reports, in a document prepared for a meeting of EU foreign ministers on Monday, Tallinn wrote that “the continued retention of assets serves as a financial and diplomatic lever, ensuring that Russia has a clear, tangible incentive to negotiate a settlement and compensation to Ukraine.

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The 27 EU leaders also decided that the assets will remain frozen until Russia agrees to pay post-war reparations to Ukraine.

Countries are considering the €200 billion reserve as a source of funding to cover the exorbitant costs of rebuilding Ukraine, which the World Bank estimates at $486 billion.

Recall 

Earlier, UNN wrote that the head of the bloc’s diplomacy, Kaja Kallas, reported an increase in the number of EU countries supporting the confiscation of frozen Russian assets. However, according to her, an agreement is not expected in March due to the lack of unanimous support.