U.S. proposes G7 working groups find way to seize $300 billion frozen Russian assets — FT

The United States has proposed that working groups from G7 explore ways to seize $300 billion in frozen Russian assets, the Financial Times reported on Dec. 28.

The U.S., supported by the United Kingdom, Japan, and Canada, has proposed moving forward with the preparatory work so that options would be ready for a potential meeting of G7 leaders around Feb. 24, 2024, the second anniversary of Russia’s full-scale invasion of Ukraine.

Read also: G7 moves closer to seizing Russian assets for Ukraine

While no decisions have been taken and the issue remains hotly debated inside European capitals, the acceleration of work on confiscating Russian assets for Ukraine highlights its rising importance for the West, FT says.

The topic was discussed this month by G7 finance ministers and their deputies, according to FT sources.

The three working groups proposed by the U.S. would examine legal issues around confiscation, methods of implementing such a policy and mitigating risks, and options for how to best channel support to Ukraine.

Read also: White House pushing for plan to seize Russia’s frozen $300 billion — report

Some EU countries, including Germany, France, and Italy, have expressed some reservations and emphasized the need to carefully assess the legality of confiscating Russian assets. Several European ministers also stressed the need to maintain high levels of secrecy over the work, according to FT.

Various options are being explored in Western capitals, ranging from directly confiscating and spending the Russian assets to generating income from them or using them as collateral for loans.

The EU has not yet resorted to seizing Russian assets themselves instead exploring ways to withdraw the profits generated for financial institutions such as Euroclear, where Russian sovereign assets worth EUR 191 billion ($212.5 billion) are held.

Washington has so far not publicly backed seizing Russian assets, but the U.S. privately circulated a discussion paper this year within the G7, suggesting that the arrest of frozen Moscow assets would be legal as "a countermeasure to induce Russia to end its aggression."

Nevertheless, Europe, where the bulk of Russian assets is concentrated, is much more wary fearing potential repercussions on financial stability and the possibility of retaliatory action from Russia.

U.S. Secretary of State Antony Blinken earlier said that the United States is considering legal options, together with the European Union, to redirect $300 billion in Russian assets to Ukraine’s economic reconstruction and other needs.

The European Council Legal Service developed a plan on Jan. 26 to use frozen assets of the Russian Central Bank, valued at approximately $36.8 billion, for financing Ukraine's reconstruction.

As a result of arrests and various asset confiscation mechanisms involving Russians and their collaborators in Ukraine since Feb. 24, 2022, UAH 28.3 billion ($753 million) has been transferred to the state budget.

Read also: EU to present plan to channel frozen Russian assets toward Ukraine’s recovery

However, the EU has assessed that it can’t legally confiscate outright frozen Russian assets, according to news agency Bloomberg. Instead the bloc is focusing on using those assets temporarily.

Belgian Prime Minister Alexander De Croo, in a joint conference with Ukrainian President Volodymyr Zelenskyy, announced plans on Oct. 11 to create a special fund worth EUR 1.7 billion ($1.9 billion) this year to support Ukraine.

The money for this fund will be sourced from frozen Russian assets within the country. Zelenskyy declared that Belgium would be the first country to employ frozen Russian assets to provide support to Ukraine.

The FT reported on Dec. 16 that the G7 countries are close to potentially confiscating frozen Russian assets.

The U.S. Senate supported an amendment on Dec. 22 to the bill that would enable seizing frozen Russian assets to help finance Ukraine’s defense against Russian aggression.

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