“We’re not touching these Russian assets,” French government spokesperson Sophie Primas told journalists last Wednesday, warning that doing so could set a dangerous precedent, discouraging foreign investment in Europe, even as the government examines legal pathways to use the funds. For now, Moscow’s nest egg looks safely out of European pockets. There is a precedent […]
In recent years, Europe’s central banks have expressed concern (cloaked in diplomatic language) that seizing foreign funds could “harm the euro as a reserve currency,” Havrylchyk told CNN.
Indeed, Russia has for years been moving its official funds out of the US, apparently fearful of repercussions over its aggressions in Ukraine and Georgia.
But continued support for Ukraine will carry on costing Europe money – and interest from Russia’s funds won’t cut it.
States like Belgium, which holds the lion’s share of frozen Russian assets (some 3 billion, according to the Institute of Legislative Ideas, a Ukrainian think tank), remain dubious, and backing from economic powerhouses like Germany would be essential for broader European buy-in.
“It would be a novelty,” he added, even if it can’t be ruled out.
When the US passed the 2024 bipartisan Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, it justified any seizing of Russia’s assets in the US on the basis that they would be used to rebuild Ukraine. And French lawmakers debating the non-binding resolution last Wednesday voted through an amendment explicitly removing provisions to use Russian assets to fund Europe’s own defense.
After World Wars I and II, a vanquished Germany was compelled to pay reparations through international treaties. But, with even a 30-day ceasefire off the table for Moscow, any such post-war accord with Russia is a distant prospect, Dopagne said.
Both the United States and Canada had already introduced legislation empowering governments to confiscate frozen Russian assets. In its final days, the Biden administration also tried to persuade European allies to confiscate immobilized Russian funds.
The EU is already using the interest from the frozen funds to back multi-billion-dollar loans to Ukraine. But European governments remain hesitant about confiscating the capital. In an understatement from UK Prime Minister Keir Starmer on March 15, it’s a “complicated issue.”
That’s a reality that European taxpayers will need to remain on board with, Havrylchyk said, if seizing Russia’s money outright is off the table.
A country like China, aware that it could face European sanctions if it invaded Taiwan, might be reluctant to place funds in the region, the argument goes.
With around two-thirds of all frozen Russian funds sitting in the EU, the stakes – and potential benefits – are much higher for European governments than they are for the US.
Legally, Europe’s hesitancy over seizing – rather than just freezing – Russia’s assets stems from one of the key principles of international law: the immunity of a state’s overseas assets from seizure.
The justification for seizing the principal of Russia’s assets would therefore be all-important, Frédéric Dopagne, professor of public international law at the University of Louvain in Belgium, told CNN.
Last week, however, French lawmakers passed a non-binding resolution calling on their government to use frozen Russian assets to “finance military support to Ukraine and its reconstruction” – specifically, the assets themselves rather than just the interest they are earning.
But the region has so far refused to touch the 9 billion of Russian central bank cash sitting in the European Union, frozen after Vladimir Putin’s 2022 full-scale invasion of Ukraine.
