WSJ: EU says it can’t seize frozen Russian central-bank assets for Ukraine

WORLD  01 December 2022 - 15:35

European Union officials said the bloc can’t confiscate tens of billions of euros worth of frozen Russian central-bank funds to pay for Ukraine’s reconstruction, while its executive body sent proposals to member states on setting up an international court to prosecute Russian officials for this year’s invasion.

Pressure had been building up for months from some member states for Brussels to come up with ways to seize Russian assets and hold top Russian leaders accountable for the war, The Wall Street Journal reports.

European Commission officials said on November 30 that because of the international principle of state immunity, they were unable to confiscate central-bank assets, but were now proposing that member states and their international partners establish a fund to manage the liquid assets and set aside profits from those investments for Ukraine’s rebuilding plans.

The Commission also proposed Wednesday the establishment of a specialized court to prosecute senior Russian officials with the crime of aggression against Ukraine. The EU executive said the court could be an independent international tribunal or a court composed of international judges and integrated with a national justice system.

The crime of aggression is one of the core crimes in international law alongside genocide, war crimes and crimes against humanity but hasn’t been prosecuted in decades. To overturn the immunity of top Russian officials from prosecution, EU officials said the court would need backing from the United Nations, where Russia, as a permanent member of the Security Council, wields a veto.

Officials said that if Russia vetoed a proposed resolution, the court could still be established via the backing of the UN General Assembly, made up of all UN members. However, they said that would require a tough lobbying campaign.

The US is facing its own challenges in trying to reappropriate frozen Russian funds to finance Ukraine’s war effort and eventual rebuilding. US Treasury and Justice Department officials have asked lawmakers to craft new legislation broadening their powers to seize—not just freeze—Russian assets and to transfer those funds to Ukraine.

Absent that new authority, the administration is constrained in what it can do, officials say. Adding to their troubles, finding assets owned by oligarchs is proving a task that could take years, they say. Ownership and control of those assets are often hidden under layers of corporations, trusts, business associates and family members, current and former Treasury officials say.

In the first days of the war, the EU, the US and other partners from the Group of Seven advanced democracies froze some $300 billion in Russian central-bank assets held abroad to prevent funds being used to prop up the Russian economy and war effort. That amounted to almost half of the bank’s total reserves.

With the war dragging on and the costs of war damage to Ukraine reaching $600 billion, according to EU officials, Western officials have been exploring ways to raise funding for Ukraine’s reconstruction.

Commission officials said the EU has no current figures for the amount of Russian central-bank assets the bloc’s member states hold or for what proportion is made of liquid assets such as cash.

In the longer term, EU officials said they would push for Russia to agree to hand over some of the frozen assets to compensate Ukraine as part of a future peace settlement.

“Russia’s horrific crimes will not go unpunished,” said European Commission President Ursula von der Leyen in a video message on Wednesday.

The Kremlin has accused the West of stealing Russia’s frozen foreign-exchange and gold reserves. Earlier this month, Russia called a UN General Assembly-backed resolution calling for Russian reparation payments to Ukraine legally null and void.

The Commission also said it hopes to use funds frozen from its sanctions against Russian oligarchs to help Ukraine. So far, member states have frozen 19 billion euros in oligarch assets, equivalent to roughly $19.6 billion, according to the Commission.

There is also a legal hurdle: to seize the money, member states have to prove the oligarchs have committed a crime. The EU recently won approval to make sanctions avoidance an EU crime. That could allow them to confiscate assets that Russian individuals tried to hide from sanctions-implementing authorities. However, the legislation won’t be retroactive, so it can’t be applied to most of the funds frozen so far.

Caliber.Az