Don’t turn frozen Russian assets into corporate bailouts

The EU made the right call when it rejected Austria’s push to unfreeze a €2bn stake in Austrian company Strabag — a holding owned by Rasperia Trading, a Russian investment firm tied to sanctioned oligarch Oleg Deripaska.

Austria proposed awarding these assets to Raiffeisen Bank International (RBI) to compensate the bank for the €2.1bn that a Russian court seized from its subsidiary in January during a legal dispute with Rasperia.

The proposal was legally unsound, strategically dangerous, and fundamentally incompatible with the principles underpinning Europe’s sanctions regime.

Although the plan has now been withdrawn, this episode exposed vulnerabilities that could easily be exploited again by Moscow, by member states, or by corporate lobbying. 

If allowed, the move would have gutted the logic of sanctions: frozen assets are meant to deprive sanctioned actors of benefit and preserve leverage for accountability, not serve as a fallback for corporate rescue.

This must be treated as a precedent-setting moment. The EU’s approach to sanctions must hold firm on a core principle that frozen private assets cannot be repurposed for private gain.

Sanctioned assets are frozen, not seized.

Under EU law, ownership remains with the sanctioned individual until a lawful confiscation process or negotiated political resolution.

Austria’s proposal crossed a fundamental line by attempting to transfer Rasperia’s frozen Strabag shares to RBI.

That would have constituted a de facto expropriation, risking a breach of EU legal norms on property rights, and signalling to courts that frozen oligarch wealth can be redistributed to settle private disputes.

It is easy to imagine that other sanctioned oligarchs would immediately demand the same treatment, and Russia would understand how to exploit the loophole.

Rewarding Russian economic coercion

The proposed compensation scheme would also have validated the Kremlin’s strategy of retaliatory expropriation.

The €2bn ruling against RBI was widely recognised as a politically-engineered judgment, delivered in an environment of intimidation, and designed explicitly to force an asset swap: Russia takes RBI’s assets at home, while Europe hands over Rasperia’s frozen assets in return.

The Russian court ruling even stated explicitly that Rasperia’s assets would be handed over to Raiffeisen — a move the EU would, in effect, have been asked to enforce.

Approving this plan would have rewarded Moscow’s coercion and legitimised a weaponised court ruling.

It would have told the Kremlin that Western sanctions can be neutralised through blackmail.

It must be noted that RBI chose to remain active in Russia following the full-scale invasion, continuing to profit from the Russian market and paying over €1.6bn in taxes to Moscow since 2022.

The bank has held the largest foreign banking footprint in Russia and continued transactions that have drawn regulatory scrutiny for their role in sustaining Russia’s war economy.

Bailing out such a bank with frozen oligarch assets would have set a precedent.

The signal to European businesses would be that they can ignore government warnings about operating in authoritarian regimes, and when retaliation hits, the EU will compensate them.

That is the opposite of sanctions deterrence.

There is a critical distinction between leveraging Russian state assets for Ukraine’s reconstruction and using private oligarch assets to refund a bank.

The former has a legitimate public-interest basis rooted in state responsibility for internationally wrongful acts.

The latter is a private windfall to a bank that willingly stayed in the Russian market long after the risks were clear. 

What Europe must do now

This episode was a warning sign - it must serve as a precedent-building moment to reinforce the rules-based nature of EU sanctions and to ensure that frozen private assets cannot be repurposed for private gain.

There are, therefore, several steps the EU should take.

First, it should codify a red line on frozen private assets, where they must not be repurposed for private claims or corporate compensation, as any derogation risks collapsing sanctions credibility.

Second, it must close the sanctions loopholes.

The EU Commission and European Council should reinforce in writing that sanctions cannot be traded away through pressure or bilateral deals.

Third, the EU must maintain a firm stance against Russian ‘asset swaps’, accepting no recognition, facilitation, or indirect validation of Russian court rulings aimed at evading sanctions.

Fourth, it must demand corporate risk ownership: Companies that stay in high-risk authoritarian markets must bear the consequences, taxpayers and sanctioned-asset pools must not insure their choices.

Europe must remain principled and vigilant against any Russian attempts to weaponise Western assets inside Russia.

The Raiffeisen case was an early test and Europe passed it for now.

Looking ahead, Europe should hold firm to three red lines: no unfreezing of private assets in exchange for corporate compensation; no recognition of Russian court rulings engineered to coerce or expropriate Western companies; and a full commitment to lawfully using frozen Russian state assets to support Ukraine’s reconstruction and reparation.

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