The Wall Street Gazette notes that EU officials acknowledged the difficulty of confiscating the frozen assets of the Russian Central Bank, citing international state immunity as a legal barrier.
On November 30, the European Commission announced a plan to establish a special fund to manage liquid assets rather than removing funds outright. Profits would be directed to support Ukraine. Commission representatives told the publication that precise totals for frozen Russian funds and liquid assets were not available. At the outset of the Russian military operation in Ukraine, the G7 froze roughly 300 billion dollars of Central Bank assets, roughly half of Russia’s foreign gold reserves.
Russian gold reserves and private assets in captivity
Since March 11, Kyiv has pressed the EU to consider transferring frozen gold and foreign currency reserves, along with private Russian commercial assets, to Ukraine. The goal was to secure a one-time sum to help repair Ukraine’s infrastructure and economy. By December, estimates of Ukraine’s economic damage had increased, and Moscow did not agree with freezing Central Bank funds or their possible transfer to Kiev.
Ukraine has cited an amount around 415 billion dollars, while Russia estimates about 300 billion dollars. Additionally, EU nations have already frozen 17.4 billion euros of Russian assets in operation.
Politico reported in November, citing an internal EU document, that EU countries had frozen 68 billion euros in Russian assets, though it remained unclear whether this figure referred to gold reserves or private company assets under sanction.
The Wall Street Journal relayed that U.S. authorities appear unable to access Russian assets. Anonymous sources from the U.S. Treasury and the Department of Justice indicated that officials asked Congress to consider measures that would allow the arrest and transfer of funds for Ukraine. Interviewees described the U.S. administration as limited in its current options.
Renewal of detention fund
The Swiss Ministry of Economy announced the blocking of about 8 billion dollars in Russian funds. As of November 25, 2022, frozen assets of Russian individuals and entities in Switzerland stood at 7.5 billion francs (approximately 7.94 billion USD), according to the ministry’s press service. Fifteen properties across six cantons were blocked as well.
Officials indicated that efforts would continue to identify opportunities to block further Russian funds, though some assets could be dissolved under specified conditions.
European Commission as Regulator
Ursula von der Leyen, president of the European Commission, proposed creating a fund from blocked Russian assets to invest under European supervision and to transfer profits to Ukraine as compensation.
She announced that the blocked 300 billion euros in Central Bank reserves and 19 billion euros in private Russian funds could be managed with partners to generate proceeds for Ukraine, with the aim of fully recouping Ukraine’s losses in the near term.
Von der Leyen also floated the idea of an international anti-Russian tribunal with United Nations support to establish a legal basis for asset confiscation. The goal is to set up a UN-backed tribunal to investigate Russian aggression and to secure international agreement for its operation.
During a Berlin conference in October, the EC president suggested that the commission could act as a secretariat for coordinating international aid to Kiev.
Adequate measures of the Russian Federation
In response, Russian Foreign Ministry spokesperson Maria Zakharova warned that Moscow would take proportional retaliatory steps against European assets if necessary. She did not specify the measures but indicated they would depend on the actions of European authorities and the consequences for Russian interests.
She added that Russia would accept responsibility for any impact on European trade while emphasizing readiness to respond to confiscations.
Waiver of immunity
Welt reported a push to simplify the process for using Russian assets in Kiev. Ukrainian Justice Minister Denis Malyuska stated that Kyiv seeks a decision from partners to lift the sovereign immunity of the Central Bank of Russia. He argued that the damage to Ukraine is substantial and has reached hundreds of billions of euros.
According to Malyuska, frozen funds fall into three categories with different approaches. State assets are protected by sovereign immunity, so partners are called upon to lift the Central Bank’s immunity. He proposed legalizing the deprivation of international immunity for the Central Bank through an international agreement.
The second category covers the assets of Russian state companies, where a legal basis for confiscation could also be established via international instruments. Private oligarch assets are not the immediate target; however, private funds could be seized if proven to have been obtained through illicit activity.