EU struggles to seize frozen Russian assets

The Wall Street Journal quoted sources as saying that European Commission (EC) officials said that the international principle of state immunity does not allow law enforcement agencies to seize the assets of the Central Bank of Russia.

In recent months, the EU has been actively discussing how to legally seize Russian assets abroad, both state and private, that are frozen under sanctions. However, in most EU member states, the seizure of frozen assets can only be legally carried out with a criminal conviction.

Furthermore, many assets of blacklisted Russian citizens are difficult to seize or freeze because they are registered in the names of family members or representatives.

European Commission President Ursula von der Leyen said that in the short term, the EU and its partners could manage the frozen assets and invest them. The proceeds would be transferred to Ukraine to compensate for the damage caused by the war in that country.

Meanwhile, Washington is facing challenges in using Russian funds. Officials at the US Treasury and Justice Departments have reportedly asked lawmakers to draft new legislation that would expand the powers to not only freeze but also seize Russian assets. Until new regulations are enacted, the US government is limited in what it can do.

Legally, the frozen funds still belong to Russia or its citizens. To access these assets, the EU would need to find a way to seize them. The EU has seized assets of Russian businessmen and companies, along with assets of the Russian Central Bank, as part of sanctions against Moscow.

According to the EC, Brussels does not have data on the amount of Russian central bank assets held by the bloc. The Kremlin said that about $300 billion in foreign reserves have been frozen since March, along with billions of dollars belonging to Russian businesses and individuals.

In May, Lithuania, Slovakia, Latvia and Estonia called on the EU to use seized Russian assets to finance Ukraine's post-conflict reconstruction.

Top US officials including Treasury Secretary Janet Yellen have warned that using such funds in Ukraine could be illegal.

Russia has strongly criticized Western countries for seizing its assets. Foreign Minister Sergei Lavrov said that freezing assets essentially constitutes theft and is illegal.

According to VTC