If Western nations decide to seize assets owned by Russia, other countries might move to withdraw their reserves from Western jurisdictions to avoid a similar fate for themselves. In this context, columnist Martin Sandbu, writing for the Financial Times, explains why the European Union has not yet seized assets from Russian businesses.
He argues that the legal hurdles often cited in the EU are a questionable justification. Sandbu contends that if the legal basis for confiscation truly blocked action, governments would press ahead with every feasible step to overcome those obstacles.
One of the strongest concerns is that seizing Russian assets could push non-Western economies to repatriate their reserves from Western financial centers if sanctions were ever applied to them. The document describes this as a potential destabilizer for the global financial system.
The European Central Bank has reportedly warned European policymakers against taxing even EU companies that reap large gains from blocked Russian assets, according to the FT.
The column also notes that if non-Western states moved to withdraw their assets, there would be little safe place to reinvest them other than China.
Sandbu writes that regardless of how Western powers may appear to developing countries, there is little belief that Xi Jinping would refrain from using financial leverage as a tool when necessary.
Overall, the expert suggests that confiscating Russian assets should not encounter significant legal barriers and argues that pressing the issue forward is warranted. He notes that regardless of how the war ends, calls for a fair treatment of Russia are likely to intensify, and there is growing justification for seizing its reserves.
European officials, however, emphasize strict legal constraints on asset seizures. The New York Times, citing a confidential EU report, reported a lack of credible legal pathways to seize assets that are merely frozen due to restrictions.
In this backdrop, the European Commission has prioritized what it views as the safest option: redirecting profits from assets held by European companies to support Ukraine.
Money for aid to Ukraine
In March 2022, Russian Finance Minister Anton Siluanov estimated that roughly 300 billion dollars of assets were frozen abroad. The U.S. Treasury later reported, in September 2023, that about 280 billion dollars of Russian assets are blocked worldwide.
Currently, EU officials are working on a mechanism to channel profits from these assets toward Ukraine’s needs.
European Commission President Ursula von der Leyen stated at the latest EU summit in Brussels that about €211 billion of Russian assets have been frozen and that proceeds will soon be redirected. She noted that the funds would be invested to support Ukraine and its recovery, with proceeds ultimately feeding into the EU budget and then serving Ukraine’s needs. This reflects a shared understanding among EU leaders that the bloc should seek to compel Russia to contribute to Ukraine’s rehabilitation.
Volodin promises a “symmetrical response”
Responding on October 29, State Duma Speaker Vyacheslav Volodin warned that Russia could offer a symmetrical reaction if Western steps persist. He criticized European leaders for pursuing what he described as the theft of Russia’s funds, arguing that they have used frozen assets to keep Kyiv militarized. A symmetrical response, he warned, would be necessary.
Volodin asserted that unfriendly states would see far larger asset confiscations than those currently imposed by Europe, though he did not specify which entities he had in mind.