March 4, 2024

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After US Freezes Russian Billions, Europe Has Its Reservations

After US Freezes Russian Billions, Europe Has Its Reservations

The Americans have submitted a proposal within the G7 for three working groups to investigate the seizure of Russian assets. reports British business newspaper Financial Times. It will take care of the legal side, the implementation of the project and the best way to donate the confiscated money to Ukraine.

The U.S. has the support of Britain, Japan and Canada to continue preparations for the seizure, with all possible options on the table in February. The options could be discussed at the G7 meeting on February 24, the day Russia invaded Ukraine two years ago.

The plan is controversial

Not all G7 countries are enthusiastic about the plan. Germany, France and Italy have expressed their opposition. They are careful and point out the risks of the scheme, which can lead to retaliation, regardless of legal issues. Many European ministers are therefore arguing for greater secrecy in the further preparations for the development of the programme.

Because while paying Russia as an occupier to rebuild Ukraine with Russian assets seems reasonable to many, taking over frozen assets is controversial. Exports are legally complex and certainly not without risks, lawyers told RTL Z in July.

There are fears that in the future other countries will be encouraged not to hold their foreign assets in euros or dollars because they don't want to run the risk of one day being expropriated. Consider, for example, China, Turkey, or oil-rich Venezuela. This could devalue the euro or the dollar and at the same time weaken the stability of the international financial system.

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State immunity

In addition, banks and other financial institutions holding frozen assets are currently obligated to prevent 'disproportionate harm' to a person or entity on the sanctions list. It is called matching State immunity: Nations do not have jurisdiction over each other or each other's property.

According to critics, you cannot adapt international law to a conflict. If you do, you don't respect that right — just like Russia — the argument goes. Generally, reparations are agreed upon after a war as part of a peace agreement.

Proponents of the seizure of Russian assets point to the example of Iraq. In 1990, $50 billion in Iraqi funds were seized through the United Nations to compensate victims of the Iraqi invasion of Kuwait. Until a large group of nations act in unison, Recommends Such a construction should be possible in the case of Russia and Ukraine, says Robert Zoellick, former head of the World Bank.