The EU considers the possibility of seizing Russian assets for the reconstruction of Ukraine
The European Union is considering seizing Russian assets frozen under sanctions for Moscow’s war against Kiev, to use them for the post-war reconstruction of the former Soviet republic that wants to integrate with Western democracies.
While many in the EU say confiscation is politically and morally desirable, they also worry it is illegal and would open up the bloc to lawsuits, which could risk losing cases in its own courts.
Here is the current state of the debate after more than 150 days of Russia’s war against Ukraine.
Freezing of assets
The EU has sanctioned more than 1,200 individuals and 100 entities for destabilizing Ukraine since Moscow’s annexation of Crimea in 2014. Following Russia’s invasion of Ukraine on February 24 this year, among them, the EU listed black President Vladimir Putin, Foreign Minister, Sergei Lavrov, and Russian oligarchs.
These people are now banned from visiting the EU and their assets in the bloc are frozen but not confiscated for sale, as doing so in most member states requires a criminal conviction.
The US Treasury said in late June that Western allies had frozen or frozen more than $30 billion in sanctioned Russian assets.
The EU’s executive European Commission has reported 13.9 billion euros of assets of Russian oligarchs blocked in the EU.
But, this may be only a small part of the wealth of these blacklisted individuals. While exact figures do not exist, Anders Aslund, a Swedish economist who has advised the Russian government in the past, estimates that the total assets of blacklisted individuals outside of Russia could be worth around $400 billion. It is not clear how much of this amount may be in Europe or the US and therefore how much may be subject to freezing or confiscation.
On top of that comes $300-400 billion worth of Russian central bank assets held in the West, of which France has reportedly frozen around €23 billion.
Seizure of assets
These assets can go towards meeting Ukraine’s reconstruction needs. A deputy prime minister of the country estimated 700 billion dollars just to rebuild the damaged infrastructure.
Western states would first have to confiscate assets, which in most EU countries requires a court conviction for a criminal offence.
To enable this, the EU Commission wants to expand the list of recognized crimes across the EU to include circumventing or attempting to circumvent sanctions. This plan could be adopted this autumn, but it will take more time to reach all 27 countries of the bloc.
In its latest package of sanctions, the EU last week put the onus on sanctioned individuals to declare their assets for freezing, in a bid to make it easier for state officials to act.
The bloc is also considering non-judgmental confiscation, although it has limited experience with it in the United States, Canada, Italy and Ireland.
With property rights enshrined in the European Charter of Fundamental Rights, the bloc’s top justice official, Commissioner Didier Reynders, was cautious.
“In my opinion, confiscation should be the result of a criminal conviction,” Reynders told Reuters last week.
“The last thing I want is for the EU to rush into decisions and then see negative decisions coming from Luxembourg or Strasbourg,” he said, referring to the EU’s highest court, the European Court of Justice and the European Court of Justice. European Commission of Human Rights in France.
The ECJ has received about 150 complaints about EU sanctions over the unrest in Ukraine since 2014, of which about 70 are still pending, the court’s press office said.
Of these, about 50 EU decisions have been annulled, at least partially, he said.
This, however, sometimes had little practical effect as was the case with Ukraine’s former pro-Russian president, Viktor Yanukovych. He was sanctioned for another year under a new official ruling when he repeatedly won against such earlier rulings that had already expired.
However, this is an important warning to those considering redirecting frozen Russian assets to rebuild Ukraine.
If sequestration proves impossible for legal or practical reasons, Reynders said the West could keep Russia’s assets frozen as long as Moscow does not agree to contribute to the reconstruction of Ukraine as part of final peace talks./REL