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Peter Davis

An writer at FOMOdrive

  • Jun 22, 2023
  • 2 min read

Bloomberg: EU won't be able to confiscate Russia's frozen assets

Obstacles have been identified by the EU in regards to the seizure of Russian assets valued at 200 billion euros.

Banks on Wall Street warned that Russia could take retaliatory action in response to the confiscation.

European officials are discussing the possibility of utilizing funds on a temporary basis.

Companies with Russian assets that have made a profit will transfer the "unforeseen contribution" simultaneously.

The European Union (EU) has determined that it is not legally permissible to completely seize frozen Russian assets (valued at more than €200 billion) solely based on the fact that they are subject to EU sanctions.

The EU is looking into giving Ukraine "windfall investment income" instead. It is believed that companies with Russian assets that make large profits and invest these funds should be required to transfer a "significant amount" to the EU.

By choosing this option, the bloc will be exposed to less legal risk, as the EU will not be in charge of their management.

Bloomberg reported that multiple large foreign banks expressed worry that the seizure of Russian assets could result in retaliatory actions taken by Moscow against foreign banks and businesses still in Russia.

Last week, the European Central Bank (ECB) cautioned that utilizing profits from frozen Russian assets to reconstruct Ukraine could weaken trust in the euro as an international currency.

Due to the sanctions, approximately $300 billion of Russian reserves have been blocked. Of those, only $80–100 billion have been located thus far.

Approximately €750 million in profits have been earned by Euroclear, the European depository, from the Russian assets that have been frozen in the EU.

In May, the European Commission (EC) declared that there are legal avenues for the seizure of assets held by the Russian Federation that are currently frozen, and for those assets to be transferred to Ukraine.

This summer, the EC intends to submit a formal proposal for how the proceeds from these assets should be used. The G7 countries have pledged not to unfreeze them until Ukraine is compensated for the "damage" caused.

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