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20th Aug 2022

EU and US keen to seize Russian funds for Ukraine

  • EU financial affairs commissioner Valdis Dombrovskis (Photo: ec.europa.eu)
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The EU is carrying out legal assessments on whether it can use frozen Russian money to rebuild Ukraine after the war, the EU Commission said Wednesday (18 May).

"We need to make sure Russia pays for its aggression against Ukrainian people and the damage it has caused," EU financial affairs commissioner Valdis Dombrovskis said.

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"We are not alone in this and the US thinking goes in the same direction", he added.

The potential Russian pot would consist of some €285bn from frozen Russian central bank reserves as well as more than €30bn in frozen private assets of Russian oligarchs.

"We are doing the legal assessments, but clearly we must cast the net wide. There is a principle in international law that the aggressor pays and we must make sure Russia pays for the damage it is creating," Dombrovskis added.

The seizure of private assets of oligarchs "has to be done on the basis of criminal law [in those countries] where the assets are located," he also said.

The US treasury secretary, Janet Yellen, who is visiting Europe this week, echoed the EU line while in Bonn, Germany.

"It's very natural that given the enormous destruction in Ukraine, and huge rebuilding costs that they will face, that we will look to Russia to help pay at least a portion of the price that will be involved," she said, Reuters reports.

"That said, while we're beginning to look at this, it would not be legal now in the United States for the government to seize those assets," she noted.

"It's not something that is legally permissible in the United States", she added.

In the meantime, the EU Commission has said it was ready to pay Ukraine €9bn in macro-financial assistance in the coming "weeks", according to economic affairs commissioner Paolo Gentiloni.

The International Monetary Fund estimates Ukraine will fall short by some €14bn by June to pay for wages and pensions and to keep schools and hospitals open in a shortfall growing by some €5bn a month as things stand.

The US and other Western countries, such as Canada, are also pouring in funds to help keep Ukraine going, but Europe's share will be the largest "since the war is on [our] borders", Dombrovskis noted.

The EU has already paid out €4.1bn since the war began in February, but will "continue to provide short-term financial support to Ukraine to meet its needs and keep basic services running," EU Commission president Ursula von der Leyen said Wednesday.

"We stand ready to take a leading role in the international reconstruction efforts to help rebuild a democratic and prosperous Ukraine" after the war ends as well, she added.

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