Battle Over €210B in Russian Assets Sparks Tensions Between Seizure and Strategy
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| EU Divided Over Russia’s Frozen Billions |
Estonia is at the forefront of the push to seize these frozen assets for Ukraine's benefit. Estonian Foreign Minister Margus Tsahkna has presented a discussion paper advocating for the EU to move beyond merely taxing the profits from these assets—a measure agreed upon by the G7 and the EU last year—to fully seizing the funds. Tsahkna asserts that it's time to take decisive action to support Ukraine's reconstruction and war efforts.
Supporters of this approach include the Baltic and Nordic states, Poland, the Czech Republic, and the EU's top diplomat, Kaja Kallas. They argue that utilizing the frozen funds is essential, especially if the United States reduces its support for Ukraine. Kallas has emphasized that these assets could serve as a tool to pressure Russia and help pay for the damage inflicted on Ukraine.
However, other EU nations, notably France, Germany, Italy, Spain, and European Commission President Ursula von der Leyen, advocate for retaining the assets as a bargaining chip. They express concerns that outright confiscation could set a dangerous precedent, potentially spooking international investors and undermining the euro's status as a reserve currency. An anonymous EU diplomat highlighted the strategic value of holding onto these assets, suggesting that once released, they lose their leverage in negotiations.
The legal landscape adds another layer of complexity. The EU has concluded that it "can't legally confiscate outright frozen Russian assets," but is exploring the possibility of taxing the annual profits generated by these assets, estimated to be around €3 billion. This approach aims to balance legal constraints with the desire to support Ukraine financially.
In parallel, the G7 nations have agreed to provide Ukraine with $50 billion in loans, backed by proceeds from frozen Russian assets. This plan aims to ensure continuous aid to Ukraine, especially in case of political changes in the U.S. However, the execution details are still being finalized, particularly among EU nations where most assets are held.
Russia has vehemently condemned the freezing of its assets, warning that any attempt to transfer them to Ukraine would amount to "theft" and could lead to severe economic and legal consequences for the EU. The Kremlin has threatened reciprocal actions, including targeting income from frozen Western assets held in Russia.
As the EU grapples with this contentious issue, the bloc must weigh the immediate benefits of supporting Ukraine against potential long-term economic and legal ramifications. The outcome of this debate will not only impact EU-Russia relations but also set a precedent for how international law addresses state assets frozen during conflicts.