Berliner Boersenzeitung - Seize or freeze? Friction in Europe over Russian assets for Ukraine

France on Tuesday voiced opposition to seizing frozen Russian assets, arguing such a move would be against international agreements in a stance that puts Paris at odds with its ally Britain.

The Baltic countries and Poland are also seen as strongly supporting seizing the assets, while Germany shares France's reservations that such a move would hinder postwar negotiations and also harm its investment image.

Tapping into the Russian assets would help plug a massive gap in defence budgets as Europe rushes to assume a greater role in defending Ukraine against Russia's invasion as American support for Kyiv wavers under President Donald Trump.

"France's position is that these Russian assets belong notably to the Russian central bank," French Finance Minister Eric Lombard told France Info radio Tuesday, and seizing such funds "would be contrary to international agreements that France and Europe have signed up to".

Foreign Minister Jean-Noel Barrot told parliament on Monday evening that billions of euros in income earned from the frozen Russian assets were already reaching Ukraine.

"But the pure and simple confiscation of these assets would represent too great a financial risk for the eurozone, for the European Central Bank, which would weaken member states at a time when they must be as strong as possible to support Ukraine," he said.

- 'Respect international law' -

Since the Russian invasion in February 2022, the EU and G7 have frozen some 300 billion euros of assets of the Russian Central Bank, according to the EU, as well as private assets of individuals such as yachts and real estate.

According to the Institute of Legislative Ideas, a Ukrainian anti-corruption think tank, some $397 billion has been frozen, mostly located in the EU with the vast majority of Russian Central Bank assets managed by Euroclear, an international fund depository based in Belgium.

European Union countries are already using income earned from frozen Russian assets to help arm Ukraine and finance its post-war reconstruction, a windfall worth between 2.5 billion euros and 3 billion euros a year.

"This is perfectly legal from the point of view of international law," said Frederic Dopagne, professor of international public law at Louvain University.

Confiscating the assets "would probably be a violation of international law, but this violation could be justified by international law itself," Dopagne added.

During his meeting at the White House with Trump last week, French President Emmanuel Macron himself came out against seizing the assets.

"You can take the proceeds of the frozen assets but you cannot take the assets themselves as this is not respecting international law and we want to respect international law," Macron said.

- 'Time to act is now' -

But that position has been criticized within France, with two of Macron's former premiers, Gabriel Attal and Edouard Philippe, backing a seizure.

It was now necessary to "move to the next level" with regard to Russia, Philippe said Tuesday, adding that frozen Russian assets should "be made fully available" to the Ukrainian war effort.

The British Guardian newspaper said Tuesday that the issue was causing "some tension" between the UK and France, which are currently leading European efforts to respond rapidly to Trump's abrupt change of policy on Ukraine.

"Of course Europe has to act quickly and I believe we should move from freezing assets to seizing assets," UK Foreign Secretary David Lammy told the British parliament last week, adding "we must act with European allies".

In Moscow, pro-Kremlin analyst Sergei Markov warned such a move would be "economic suicide" for Europe.

Russia "would cry scandal" and could seize the assets of European companies still operating in Russia such as retailer Auchan or DIY supplier Leroy-Merlin, he told AFP.

The Financial Times reported Tuesday that France and Germany are discussing with the UK and other countries ways in which the funds could be used, notably by allowing seizures should Russia violate a future ceasefire.

"This idea is a step in the right direction but we must do more and the time to act for Ukraine is now," said Estonian Foreign Minister Margus Tsahkna on X.

"Ukraine needs these funds now to change the dynamics of this war."

(F.Schuster--BBZ)