If anyone is looking for graphic proof that Vladimir Putin did not expect the strong reaction of the European Union to the invasion of Ukraine, one need only trace the assets that the Central Bank of Russia had abroad before giving the order to attack By the end of 2021, tens of billions of dollars flowed out of the dollar system en route to Europe. Four days after the invasion, all Russian assets in the Union – and not just the few remaining in the UK or the US – were blocked.
As investments in debt bonds and other products matured, the money ended up in Euroclear, the clearing and settlement house based in Belgium. The balance sheet shows some 191,000 million euros affected by the sanctions that Russia is unable to remove. Protecting them from cyber attacks, Russian legal actions and political decisions has become a real nightmare for the group.
The fate of this coveted pile of money, which Kyiv claims to offset the costs of the war, has become the latest focus of friction between the United States, from where there is talk of its pure and hard appropriation , and the Twenty-seven, supporters of less risky approaches from a legal and monetary point of view. So far, the EU has not done anything with the Russian money, but on February 12 it agreed to legally separate the profits generated in the form of interest (about 4,000 each year) and in the coming weeks it will make a decision to put them to use in his aid to Kyiv. Washington wants to go further.
Nicolas Véron is an economist, but he asks not to lose sight of the political context in which the White House's urgent calls to use this money take place. "It is impossible to understand the current discussion without taking into account the current asymmetry between the EU (which has demonstrated its willingness and ability to provide financial support to Ukraine) and the United States, which has no prospect of demonstrating- in the short term given the electoral context. The US is trying to change the conversation so that attention is not paid to the inability of the Congress to support Ukraine", says Véron, who makes an analysis that coincides with the one made in European diplomatic circles.
The Union has dismissed the idea of confiscating the frozen funds, all its legal analyzes agree that they belong to the Central Bank of Russia and there is no need to change ownership. "Transferring your property to Europe under the current circumstances would be extremely problematic from the point of view of the rule of law, and defending it against Russia is very important for us," says Verón, a member of the Bruegel Studies Center of Brussels, which considers the defense of legality more important than the possible monetary and geopolitical consequences.
The European Central Bank and the Federal Reserve of the United States have strongly opposed any step that could be perceived as confiscation. “Central bankers fear for the reputation of their currencies. Because if we decide to keep the Russian assets, other countries will think twice about keeping their money in euros or dollars", says MEP Johan van Overtveldt (N-VA), former Minister of Finance from Belgium As the headquarters of Euroclear, the Government of this country opposes any solution that puts financial stability at risk, a caution shared by the large EU countries.
Van Overveldt advocates a third path between doing nothing or almost nothing and confiscating Russian assets: using them as collateral to ask for a loan so that money can be mobilized for Ukraine but without touching the original assets, the whose fate would be decided in hypothetical peace negotiations. "The main advantage of this idea is that it would allow us to have quick access to a large sum of money", explains the former Belgian minister on the phone, who also defends that it would create pressure on Putin to negotiate. The spirit of Van Overtveldt's proposal has generated interest in the United States, and the G-7 has discussed options in the same direction: using Russia's frozen assets as collateral to issue debt to Ukraine. Lieve Mostrey, CEO of Euroclear, reacted to this news by warning against the initiative, which she believes would carry the same financial stability risks for Europe as a pure and hard confiscation. The latest G-7 communique only talks about using the windfall generated by the assets and reiterates that any decision to use them for the benefit of Ukraine will be "in accordance with our respective legal systems and international law", a position from which their Finance Ministers have not budged this week.
US Treasury Secretary Janet Yellen arrived at the meeting in Sao Paolo and insisted on the "legal and moral" arguments for seizing the funds (Washington maintains that it can take countermeasures against a country that violates international law) or use them as collateral, but her European colleagues held her back. "It would be a mistake not to respect international law, it would weaken our credibility and our legitimacy", concluded Bruno Le Maire.
