By Alberto Nardelli, Saleha Mohsin, and Stephanie Bodoni
The European Union is studying the feasibility of using billions of euros worth of Russian central bank assets already frozen by member states to help with Ukraine’s reconstruction efforts, according to people familiar with the matter, Bloomberg informs.
The discussions are at an early stage and legal experts have been recently tasked to look into possible options, the people said, asking not to be identified discussing confidential matters. Assessing whether or how to take control of the assets is extremely complex and potentially legally fraught.
The options would focus on how to eventually seize some of the about $300 billion of the Central Bank of Russia’s reserves that were frozen by the EU, the US and other allies following Russia’s invasion of Ukraine. Any EU action would focus on assets held in Europe, the people said. It is unclear precisely what assets have been frozen in the EU.
The European Commission is “exploring how to make Russia pay for the destruction it caused” and it’s been asked by EU leaders “to present options for using frozen assets for the reconstruction of Ukraine, in line with EU and international law,” said spokesman Christian Wigand, adding that “work is underway.”
A US Treasury Department spokesperson declined to comment.
Treasury Secretary Janet Yellen said in May she believed such a move is “not something legally permissible in the United States” but that “it’s very natural that given the enormous destruction in Ukraine, and huge rebuilding costs that they will face, that we will look to Russia to help pay at least a portion of the price that will be involved.”
The Treasury Department at the time expressed concern about setting a precedent that would discourage other countries from parking their central bank assets in the US.
The Kremlin has denounced the freezing of the reserves as illegal and said it would fight any effort to seize them for other purposes. “We’re talking about an international act of thievery, in violation of everything,” spokesman Dmitry Peskov said on Oct. 31.
The EU’s justice commissioner Didier Reynders told German media group Funke, including the Westdeutsche Allgemeine Zeitung newspaper, on Saturday that the frozen reserves could be kept as a guarantee until Russia voluntarily participates in the reconstruction of Ukraine.
The EU’s executive arm said in May that member states had reported the freezing of about €23 billion of assets of the Russian central bank. One of the people said that figure has since grown but didn’t disclose a precise amount as it is still being assessed.