Written by Dmitry Zhidanikov and Viktoria Waldersee
DAVOS, Switzerland (Reuters) – Western officials said on Wednesday in Davos they were open to the idea of seizing $300 billion in Russian assets to aid Ukraine, but they were wary of legal details. warned that even if it were possible, it would be difficult because the devil dwells in it. , it will not be a panacea for Kiev.
After President Vladimir Putin sent troops to Ukraine in 2022, the United States and its allies banned transactions with Russia’s central bank and Treasury, and blocked about $300 billion of Russian sovereign assets in Western countries.
G7 countries are discussing the possibility of confiscating frozen Russian assets, with some G7 members raising concerns about the precedent, mechanics and potential impact of taking such action against central bank assets. I’m holding you.
Penny Pritzker, the U.S. Special Representative for Ukraine’s Economic Recovery, said during a panel discussion on Monday: “The first thing you’ll see is that there’s going to have to be a ton of lawyers involved. No decisions have been made yet.” .
“If a decision is taken, it will ultimately be a collective one. It is a misconception to think that this will be a panacea. Serious efforts are ongoing, but we are far from a conclusion.”
Russia, which was not represented at Davos, warned that confiscation of these assets would violate free market principles, and the Kremlin threatened to seize assets in the United States, Europe and elsewhere in response to such a move. did.
Need a clear mechanism
U.S. Treasury Secretary Janet Yellen last year raised concerns about significant legal obstacles to seizing frozen Russian assets, but recently agreed to consider the idea amid a tougher funding environment. .
Another concern among some Western officials is that confiscation of Russian assets invested in euro, US dollar, and British pound government bonds could undermine central banks’ willingness to store foreign exchange reserves with each other. There is.
The bulk of the assets – essentially securities invested by Russia’s central bank – are frozen at the Brussels-based depository Euroclear.
Belgian Prime Minister Alexander Decroo told Reuters he did not oppose the confiscation of frozen assets, but said there needed to be a clear mechanism.
“We won’t say no to asset confiscation, but we need to work on creating a mechanism. For example, it can be used as collateral to raise funds for Ukraine,” Decroo said.
“We are open to further discussions and happy to participate in a solution that finds a legal basis for transfers to Ukraine without destabilizing the global financial system,” he said.
Some securities are being converted into cash as they mature, and the transaction is subject to a 25% tax, he said.
“If we have taxable income, we will sequester it so that it can be sent to Ukraine,” Decroo told Reuters in Davos. He said taxes on frozen assets would total around 1.3 billion euros in 2023 and around 1.7 billion euros in 2024.
(Written by Guy Faulconbridge in Moscow; Edited by Alex Richardson)