Europe is divided: will frozen Russian assets be transferred to Ukraine?
26 February 14:58
ANALYSIS
Europe is divided into two camps on the issue of transferring frozen Russian assets to Ukraine. The leaders of four EU countries and the President of the European Commission are against this step, pointing to the risk of losing influence over Moscow. Instead, Poland, the Czech Republic, the Baltic States and Northern Europe are in favor of transferring €200 billion of frozen Russian assets to Ukraine, believing that these funds should be used to support Ukraine. This position is also supported by the head of EU diplomacy, former Estonian Prime Minister Kaja Kallas.
Lithuanian Foreign Minister Kęstutis Budrys believes that the legal arguments against the transfer of assets to Ukraine are not convincing enough. He emphasizes that all that is needed is political will, and that countries opposed to the transfer should provide more substantiated explanations as to why it cannot be done.
France, Germany, Italy, Spain, and Ursula von der Leyen believe that the confiscation of Russian assets could pose a threat to the EU’s financial stability, scare away international investors, and reduce the EU’s influence in negotiations with Moscow.
Komersant has analyzed in detail how great the risk is for Europe and how much frozen Russian assets are involved.
There is no common position in Europe
Political analyst Volodymyr Fesenko exclusively for
He explained that initially these assets were not used, and their fate was to be decided after the war in Ukraine was over in negotiations. The expert clarified that the official position of Europe was to use these assets to rebuild Ukraine only if Russia refused to pay reparations for the destroyed territories. However, when it became clear that the war would drag on and Ukraine’s financing problems were becoming more acute, they began to consider the possibility of using these assets during the war.
“Last year, it was decided for the first time to use the profits from frozen assets to reimburse Ukraine’s expenses or help our country,”
– Fesenko said, adding that this was part of a broader agreement as part of a large $50 billion aid package to Ukraine.
Despite the new steps to use the proceeds of frozen assets, the assets themselves remain untouched.
“The position of the EU leadership and the European Bank was that the use of these assets in favor of Ukraine could negatively affect the financial stability of the EU,”
– said the political scientist.
Fesenko explained that this is due to the risks to the euro and the potential scare away of investors from the Global South and China.
“I don’t see anything new in the position of the four countries that has emerged now. This is a long-standing discussion,”
– Fesenko said, emphasizing that the main problem is not so much the use of assets as the possible political and economic consequences of such steps.
Can we expect the assets to be returned to Ukraine?
When asked whether the frozen assets could be transferred to Ukraine, the expert replied that there are currently no grounds for this. Instead, China’s involvement may become an important point in Ukraine’s recovery, Fesenko said. He suggested that China might want to be a part of Ukraine’s recovery process, but the question of whether China is ready to invest its funds remains open.
“Special financial mechanisms and organizational forms will be formed through which Ukraine’s recovery will be carried out. China also wants to be involved, but the question of whether its funds will be used is another matter,”
– said the political scientist.
Fesenko noted that in the near future we should expect even greater challenges. Then, according to the expert, new ideas for using frozen assets may emerge that will contribute to the restoration of not only Ukraine but also the territories temporarily controlled by Russia. He also emphasized that there is an idea of returning most of these funds to Russia to rebuild destroyed cities in the south and Donbas. Volodymyr Fesenko emphasized that the fight for the use of frozen assets to rebuild Ukraine will be difficult, but not hopeless.
Читайте нас у Telegram: головні новини коротко
What is the actual amount of Russia’s seized funds in Europe?
Andriy Novak, Chairman of the Committee of Economists of Ukraine, in a conversation with journalists
“The fact that some European countries and the European Commission oppose the transfer of Russian assets to Ukraine because of the possible negative impact on the euro or the banking system is, to put it mildly, not true at all,”
– the expert said.
According to Novak, the amount of Russia’s seized assets in Europe, estimated at $210-250 billion, is quite acceptable for European banking.
“These amounts are not excessively large for the European financial turnover. In addition, the assets will not be transferred to the Ukrainian side in full at the same time. These assets will be transferred in stages over several years, possibly within five to ten years,”
– he clarified.
Reputational risks in Europe: is it really a problem?
Novak also denied another argument of European critics – possible reputational losses of the European banking system due to the transfer of Russian assets.
“The issue of reputation in the context of concealing the assets of an aggressor and terrorist, which Russia is, looks absolutely illogical. Concealing the assets of criminals, terrorists, and aggressors is what really harms the reputation of European banks,”
– the economist added.
The expert admitted that the only argument that makes sense today is the possibility of using these assets in future negotiations with Russia. However, according to him, after the war is over, Russia will have to pay for the damage caused.
“Russian assets will be used to restore Ukraine, and the question of what part of them Russia will get back may be subject to negotiations,”
– Andriy Novak added.
As for the actual process of transferring assets to Ukraine, it will be the subject of political negotiations. According to Novak, at the moment, Ukraine is receiving only a percentage of the frozen assets, not their full amount.
What will Ukraine spend these funds on?
The issue of spending these funds is also important. If the assets are transferred during the war, the main item of expenditure for Ukraine will remain defense, the army, weapons and ammunition.
“If the assets are provided after the war is over, we are talking about restoring and rebuilding the country,”
– Andriy Novak said.
The economist also noted that the funds are likely to be channelled through international funds or other special mechanisms to control their effective use.
“The funds will be monitored by international institutions to maintain the effectiveness of their use, as Ukraine, unfortunately, still has a reputation for high levels of corruption,”
– he added.
Thus, the issue of the transfer of Russian assets to Ukraine remains at the political level, and any final decisions on how and when these funds will be transferred to Ukraine will depend on the outcome of international negotiations. At the same time, it is important to understand that even partial use of these funds for Ukraine’s recovery is a key point in the process of rebuilding the country after the war.
