EU Plans To Use Frozen Russian Assets For Kyiv Could Increase Debt

Illustration of the European Union. (Wikimedia Commons/Thijs ter Haar)

JAKARTA - The use of frozen Russian assets for reparations loans to Ukraine risks increasing European debt costs, Euroclear warned in a letter to European Commission President Ursula von der Leyen and EU Council President Antonio Costa seen by the Financial Times (FT).

According to the Brussels-based central securities storage agency, such a mechanism will be considered a "confiscation" outside the European Union and scare investors, the newspaper reads, as quoted by TASS November 27.

It said the loan plan would undermine the investment climate in Europe "because investors, particularly state and central bank wealth funds, would consider this initiative to be equivalent to the confiscation of central bank reserves, which undermine the rule of law," said Euroclear CEO Valerie Urbain, in the letter.

In addition, such action would lead to "compensation payments by member states (EU) to Euroclear," the British newspaper quoted him as saying.

Belgium, where 200 billion euros worth of Russian assets were frozen in Euroclear, blocked the European Commission's proposal to take over the asset under the guise of a reparatory loan to Kyiv at the European Union Summit on October 23.

The Belgian government demands legally binding guarantees from all EU countries, they will fully bear the financial and legal burden Brussels will face as a result of Russia's retaliatory measures.

Russia's Ambassador to Belgium, Denis Gonchar, previously told TASS, despite the scheme used to take over the asset, it would be considered theft.

He warned Russia's response "will soon follow" and forced the West "to bear the loss."

Meanwhile, Russian Foreign Ministry spokesman Maria Zakharova this week warned European countries should return blocked Russian assets if they do not want to be "known as European thieves" and receive the harshest punishment for their crimes.

"Only Russia has the right to decide what will happen to the assets of the Russian Federation," he stressed.

"And those holding the Russian Federation's money illegally should return it if they don't want to be known as European thieves and receive the harshest punishment for their crimes," Zakharova stressed.

The Russian diplomat's comments on Telegram responded to French President Emmanuel Macron's statement that the right to manage frozen Russian assets in the European Union belonged to Europe.

This was conveyed by President Macron in line with the rejection of the provisions in the Russia-Ukraine war peace plan carried by the United States.

The 28-point peace plan proposed by the United States last week includes proposals to use these assets for US-led reconstruction efforts in Ukraine after the ceasefire was agreed.

The proposal risks thwarting Europe's efforts to mobilize 140 billion euros from Russian assets to fund war efforts in Ukraine.

It is known, when Russia invaded Ukraine in February 2022, nearly 300 billion euros in Moscow assets, including bank accounts, securities, real estate to cruise ships, were abroad and frozen due to Western sanctions, quoted from DW.

Although many countries hold these assets, including the United States, Canada, Britain, and Japan, most of these assets are in EU member states, and the largest is in Belgium.

Euroclear, Brussels-based financial storage agency, holds about 180 billion euros of Russian assets frozen.