EU finds legal way to use seized Russian central bank assets — media reports

26 January, 06:51 PM
Implementation of the plan assumes that the assets will not be expropriated and certain conditions will be met (Photo:REUTERS / Yves Herman)

Implementation of the plan assumes that the assets will not be expropriated and certain conditions will be met (Photo:REUTERS / Yves Herman)

European Union member states have been told the bloc has the legal authority to temporarily leverage at least EUR 33.8 billion of Russian central bank assets to help pay for the reconstruction of Ukraine, the Bloomberg news agency reported on Jan. 26.

The bloc’s Council Legal Service told diplomats that such a plan is legally feasible, as long as the assets aren’t expropriated and certain conditions are met, sources familiar with the matter told Bloomberg.

The conditions include a termination date, a focus on liquid assets and clarity that the principal and interest would be returned to Russia at some point, the people said.

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As a first step, the EU is considering pooling together the assets at the EU or international level in order to generate returns that could be used to finance the reconstruction of Ukraine — a task the World Bank has estimated could cost at least $350 billion.

However, according to Bloomberg, managing Russian assets would come with some risks. During a discussion with EU ambassadors on Jan. 25, EU lawyers explained that if there was a loss while the bloc managed the Russian assets, compensation would have to be provided through the EU budget or by member states.

The EU’s executive arm also warned that it would be difficult to take a decision until there is more clarity about the volume of assets that could be used and that the first step would be to locate them.

Some estimates suggest that Russian central bank assets frozen abroad amount to $300 billion. EU officials estimate that about EUR 33.8 billion of that is sitting in EU-based deposits, although the figure is still under assessment.

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