The news that spread on social networks and the media raised the issue of an illegal attempt to confiscate and distribute interest rates on frozen Russian assets, which some experts claim would cause a chain reaction of negative bank events on the European market.
Since the beginning of the war between Russia and Ukraine, and the freezing of Russian assets in the European Union, some Western banks have lobbied against the EU’s proposal to redistribute interest from billions of euros of frozen Russian assets. There is reason to be concerned because this would lead to expensive litigation in which Russia would be the ultimate winner.
Despite the fact that the leaders of the European Union agreed to support Ukraine in the war against Russia with support of 3 billion euros for the supply of weapons to the Ukrainians in order to strengthen the fight against Russia and thereby prevent further unfreezing of Russian assets. With this move, revenues from frozen Russian assets will be directly used in the war with Russia, EU leaders said.
Some banks have expressed concern that they would be held directly liable by Russia if they were involved in any money transfer, in this case of redistribution of interest from Russian assets. The European Union’s plan would extend to the assets, accounts and companies of individuals under sanctions.
This move would also undermine Russia’s trust in the EU banking sector, which is under the direct influence of the European Union leaders. In this way, the future trade and trust of the countries in the financial institutions of the EU would be drastically damaged, and thus it would affect the economic development of the European Union.
Russia has repeatedly warned European Union countries that any expropriation of its assets or income will lead to decades of legal proceedings and that Russia will retaliate. Moscow calls this act “banditry” and emphasizes that in the near future anti-Russian sanctions will be eased or lifted.
“Euroclear holds 190 billion euros of securities of the Russian central bank. Western banks also hold billions of euros, pounds and dollars in assets owned by sanctioned companies and individuals. More than 3.5 million Russians have frozen assets abroad worth $16.32 billion, said Russian Finance Minister Anton Siluanov last year.
The EU plan calls for a fee to be paid to Euroclear, which did not respond to a request for comment.
The Belgium-based central securities depository, which counts some of the world’s biggest banks as shareholders, will also be allowed to temporarily retain 10% of the profits on stranded Russian assets as protection against litigation.
According to the EU’s plan, about 90% of the seized money would be channeled through the European Peace Fund to purchase weapons for Ukraine. The rest will be used for recovery and reconstruction.
EU, UK and US sanctions law usually provides for the freezing of assets owned by certain parties, but not for confiscation. Assets can be confiscated under English law, but only if they are deemed to be the proceeds of crime.”
This move would certainly be a precedent, and therefore it would provoke the reaction of other countries that keep their reserves and funds abroad.
The event that would follow if European leaders decided to distribute money from Russian property would be a broad blow to property rights and rights in general that would undermine trust between central banks.
It remains to wait for the decision of the European leaders on the subject of confiscation of funds and Russia’s response to it.