Author: Lucie Sýkorová, HlidaciPes.org
Frozen Russian assets in the EU worth around €200 billion may soon be seized. Last week’s debate in the European Parliament plenary session showed that political will for this step has increased significantly across all factions, with the exception of the Patriots and Sovereignists.
European countries have been considering the idea of confiscating frozen Russian assets for more than two years. Specifically, this involves €200 billion in Russian assets belonging to the Central Bank of Russia and managed by Euroclear, an international fund depository company based in Brussels.
These assets were frozen after Moscow launched its invasion of Ukraine in 2022. The original idea was that the Russian central bank’s assets would remain frozen until Russia paid for the damage it had caused to Ukraine.
Cold shower
Last May, the EU began to use the interest generated by the frozen assets, which amounts to around €3 billion per year. This money was used to start repaying a $50 billion loan provided by the G7 to Ukraine last June. However, the EU has not yet proceeded with the confiscation of Russian assets.
Initiatives calling for confiscation have so far been led mainly by the Baltic countries and Poland within the EU. The process has been blocked mainly by France and Belgium. However, France has fundamentally changed its position following Donald Trump’s decision to halt aid to Ukraine, which is facing Russian aggression.
Last Wednesday evening, French lawmakers officially confirmed this change of position when, after an eight-hour debate, they approved a non-binding resolution calling on the European Union to seize frozen Russian assets and use them to support Ukraine.
A debate was held in the European Parliament at almost the same time. During the debate, representatives of the Polish Presidency of the Council and the European Commission called on the Commission to prepare a concrete proposal for the seizure of Russian assets and their subsequent use.
Among Czech MEPs, members of the People’s Party (EPP) expressed their unequivocal support for the confiscation of frozen Russian assets.
“Donald Trump’s decision to stop aid to Ukraine was a wake-up call or a cold shower for many in the EU. Several calls have now been made from the European Parliament, including to the Belgian king, to start using this money, primarily to help Ukraine, to purchase weapons, etc. I think it is our moral right to use this money. If we don’t use it, the Russians will use it for something completely different,” said Czech MEP Ondřej Kolář, who had already proposed a similar principle in the Czech Republic before joining the European Parliament.
“I am personally glad that the Czech government has also understood the importance of this issue and that the prime minister has now identified the use of frozen Russian assets as one of the ways to obtain funds for arms purchases and infrastructure financing,” he added.
“At a time when Russia is recruiting terrorists willing to commit sabotage in EU countries, we must respond unequivocally and move from words to concrete action,” said MEP Tomáš Zdechovský, referring to new findings by a network of European public media reporters published this week. Journalists found that pro-Russian groups were offering crypto payments in exchange for hybrid attacks across Europe.
Money from the worst kind of criminals
Pirate MEP Markéta Gregorová takes a more cautious view of the seizure of Russian assets.
“If it were just a political issue, I would definitely be in favor. But it is also an economic issue, and according to a number of banks, including the European Central Bank, it could weaken the euro against the dollar. And generally undermine the legal certainty of investors. In the long term, this could mean a certain impoverishment of Europe. However, I believe that if there is a firm and unified political will, and it is clearly stated that this is an absolute exception concerning only Russian assets that have been frozen because of the war, the market will not collapse. However, because individual states are wavering, I fear that this unity will not be found,” she told HlídacíPes.org.
“At least so far, we have managed to release 50 billion in interest from Russian assets,” she added.
The concerns of the European Central Bank are refuted by MEP Luděk Niedermayer, who previously served as deputy governor of the Czech National Bank.
“In my opinion, the financial sector’s concerns that this would have a negative impact on the credibility of European institutions are exaggerated. If people who want to commit war crimes, murder and rape women and children are not going to invest money in European institutions, then I don’t see that as a loss. I am very sorry about what I consider to be the European Central Bank’s disproportionate caution. The European financial system will be secure, modern, and competitive. I don’t think we should say that we will protect the money of even the worst criminals without any conditions,” said Niedermayer.
According to him, the seizure of Russian assets will not be a rash and ill-considered move. “We have been discussing the legal issues of this step with diplomats for more than two years. And now strategic questions are also emerging, namely how to make the best use of this unique package of money.”
The view that the concerns of the European Central Bank and some countries are exaggerated and unnecessary is also shared by some politically uninvolved experts. Nigel Gould-Davies, senior fellow for Russia and Eurasia at the International Institute for Strategic Studies (IISS), told CNBC that extensive studies by international lawyers have shown that there is a safe legal path to seizure and that concerns about the economic impact have been exaggerated.
“When the assets were first frozen — at the moment Russia lost access to them — there was no adverse impact on European economic or financial stability. There is no reason to think that markets or individual creditor states would act differently if Russia permanently and formally lost these assets,” he said.
Europe’s trump card
Danuše Nerudová sees the frozen Russian assets as a strategic opportunity.
“We were afraid of Russia’s reaction, but it came a long time ago. The confiscation of foreign companies in Russia happened a long time ago, and many European companies that had assets and operations there have already written them off as losses because, according to new Russian laws, they will never get their assets back. Europe is not as economically powerful as the US, and we do not have as strong an army—as Donald Trump said, we do not have the cards—so from my point ofview, this is the card that Europe has, and thanks to which it can also sit at the table during peace negotiations. It is a very strong card, €200 billion is a lot of money, and I think now is the time to use it.”
MEP Alexandr Vondra, a member of the European Conservatives and Reformists (ECR) group, understands the concerns of countries that fear the seizure of Russian assets.
“We Czechs can easily be in favor of confiscating Russian assets, as we don’t have much in Russia apart from the Czech House. This is certainly easier to approve when we don’t have much to lose. But countries that are more exposed in terms of investments and assets around the world could lose a lot if a precedent were set that would then be used further.”
Estonia as a pioneer
France was originally opposed to confiscation because it feared that it could violate international law and scare off investors. Concerns that this move would weaken markets, individuals, investors, and the euro were reiterated on Monday by European Central Bank President Christine Lagarde at a meeting with European Council President Antonio Costa.
Estonia presented a specific mechanism for using frozen Russian assets in accordance with international law last year. In May, the Estonian parliament passed a law allowing the confiscation of assets belonging to sanctioned Russian individuals for the benefit of Ukraine.
Estonia is playing a pioneering role in this process.
“The adopted law proposes a mechanism that holds individuals and companies directly involved in the aggression against Ukraine accountable. The use of property as security for damages caused will be decided by the Ministry of Foreign Affairs in administrative proceedings. For this decision, it is necessary to prove that the unlawful conduct caused damage that must be compensated under international law,” explains the Estonian parliament on its website.
Kaja Kalas, the current EU Deputy Commissioner and High Representative of the EU for Foreign Affairs and Security Policy and former Prime Minister of Estonia, advocated the seizure of Russian assets by the EU even before the US presidential election.
Two years ago, the prime ministers of Poland, Latvia, Lithuania, Estonia, and at that time also Slovakia, called on Europe to use the frozen assets to “cover the costs of Russian aggression against Ukraine, including support for Ukrainian internally displaced persons, and also for the future reconstruction of Ukraine.”
However, this “Robin Hood plan for Ukraine,” as the proposal was called, failed at the time, mainly due to opposition from France and Germany.
