The European Union (EU) has decided not to seize frozen Russian assets from 2022 (about more than $200 billion) according to documents released by Deutsche Welle (DW) after the EU summit on March 20.
According to DW, the real reason behind this decision is the EU's concerns that the seizure could violate international law and cause financial instability. However, the profits from the above assets will continue to be used to support Ukraine.
After the Russia-Ukraine conflict escalated in 2022, the West has frozen a large amount of Russia's assets, including central bank reserves deposited in short-term government bonds.
Currently, most of these assets have been converted into cash and held at banks with EU deposits, most notably at the Belgian clearinghouse Euroclear.
Poland and the Baltic countries strongly support the seizure of Russian assets to finance the reconstruction of Ukraine, which is estimated to need 524 billion USD in the next decade according to the World Bank.
However, many other EU countries have opposed it, worrying about legal risks and negative impacts on Europe's financial reputation.
An EU diplomat told DW: "We are thinking about the end of the Ukrainian conflict, about peace negotiations, a ceasefire, or even a peace deal that could be signed in the next 3 months or 3 years. And people are starting to realize that holding these assets could be more important than confiscating them without knowing what to do."
However, the EU is still committed to increasing pressure on Russia through additional sanctions and implementing existing measures more strictly.
Moscow has repeatedly condemned any attempt to appropriate its assets, calling it an act of "theft" and warning of serious legal consequences. Russia has also hinted at retaliatory targets by targeting Western businesses operating in Russia.
The confiscation of national assets after war is not unprecedented, but before it only took place when a peace treaty was imposed on the defeated country.
In Russia's case, the conflict is not over, and that has the EU reconsidering: Is it worth trading for legal risks to set a dangerous precedent?
