EU capitals should consider seizing frozen Russian foreign exchange reserves to help pay for Ukraine’s post-war reconstruction, the bloc’s top diplomat said as the West discusses how to force Moscow to pay for some of the damage caused by the conflict.
Joseph Borrell, the EU’s foreign policy chief, said the United States had taken control of billions of dollars in assets belonging to the Afghan central bank, in part to compensate victims of terrorism and humanitarian aid to the country. it was logical to consider such steps with the Russian reserves.
“I would be very much in favor because it is full of logic,” Borel told the Financial Times. “We have the money in our pockets and someone has to explain to me why it is good for Afghan money and not for Russian money.
At the start of the war, the EU and its allies froze hundreds of billions of dollars in foreign exchange reserves parked in Russian central bank accounts. Russia said in March that central bank sanctions had frozen about $ 300 billion of its gold and foreign exchange reserves, which totaled more than $ 600 billion.
EU officials have questioned whether Russia’s reserves could be deployed in any way in Ukraine’s reconstruction efforts, but Brussels has not come up with any political proposals on the subject. Borrell raised the idea as one of the many ways Russia could be made to contribute.
Asked last month whether the money could be seized and used to rebuild Ukraine, US Treasury Secretary Janet Yellen said it was not something to be done lightly, it should only be done in coordination with allies. and that it may require legislation in the United States.
Borrell said the question of how to pay for Ukraine’s reconstruction is one of the key political issues, given the “incredible amount of money” that will be involved. He wanted to see a discussion on the methods of providing “military compensation” coming from Russia.
The European Commission has said that the cost of reconstruction could reach hundreds of billions of euros and that Europe is expected to bear a significant share of the burden. The sums raised at recent conferences on promises made by Ukraine’s partners, he added, were a mere “drop in the ocean” compared to what would be needed.
US President Joe Biden has proposed that the confiscated assets of the oligarchs be sold to help rebuild Ukraine, an idea that was also advocated last week by European Council President Charles Michel. Commission officials are exploring ways to make this legally clearer, but the issue has been met, given the overriding need to respect due process and not by rail through the legal rights of individuals.
Asset confiscations are sometimes possible after a criminal conviction, but this requirement will not be met just because someone has been sanctioned.
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The idea of confiscating Russia’s foreign exchange reserves would be a dramatic move that is likely to worry other governments with difficult relations with the EU and its partners.
But Borrell said that would not be unprecedented, citing the US decision to set aside $ 3.5 billion in frozen assets of the Afghan central bank for needs, including humanitarian aid and compensation for the families of victims of the 9/11 attacks.
“This is one of the most important political issues on the table: who will pay for the reconstruction of Ukraine? Said Borel.
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