Blocked Russian assets are the "golden goose", profits unexpectedly flow to Ukraine, Europe wants more

There have been recent debates among European leaders about using frozen Russian assets to compensate Ukraine. Currently, this issue remains at a standstill, with no solution found.

The World Bank estimates that rebuilding Ukraine will cost $524 billion over 10 years, more than the total value of Russian assets frozen in the West. (Source: Transparency International)

As US support for Ukraine plummets, European allies are weighing whether to seize some $300 billion in frozen Russian assets held in the West.

Some countries agree to seize Russian assets, but on the contrary, there are opposing opinions, saying that this move could violate international law and destabilize financial markets.

The Group of Seven (G7) has recently used $50 billion in interest from Russian money frozen in the West to support Ukraine. But Poland, Britain, Lithuania, Latvia and Estonia want more.

The World Bank estimates that rebuilding Ukraine will cost $524 billion over 10 years, exceeding the total value of Russian assets frozen in the West.

Meanwhile, Ukraine's European allies are considering increasing financial aid to the Eastern European country, after US President Donald Trump declared that Europe must take care of its own security.

"The goose that lays the golden eggs"

European leaders said seizing the assets now would mean the money could not be used as a bargaining chip in any peace deal between Russia and Ukraine.

French Finance Minister Eric Lombard said that the seizure of assets at central banks is a violation of international law. If the assets of the country are seized without legal grounds, it could pose a risk to the financial stability of Europe.

Agreeing, Belgian Prime Minister Bart De Wever stated: "I am in favor of caution when it comes to those frozen assets. Right now, it is really a 'golden goose'. The unexpected profits from it will flow to Ukraine."

Opponents of Russia's asset seizures also worry that countries and investors will be reluctant to use European financial institutions if they fear their assets could be seized, undermining the role of the euro as an international reserve currency.

"Governments are concerned that countries like Saudi Arabia and China could sell European government bonds. That would raise borrowing costs for European countries already drowning in sky-high public debt," said Elina Ribakova, an economist at the Bruegel think tank in Brussels.

However, Elina Ribakova backed the seizure, arguing that the European Central Bank has the tools to prevent any irrational bond sales.

Russia does not have many advantages

Some experts believe that seizing Russian assets is an appropriate “countermeasure.” For example, Nigel Gould-Davies, Senior Fellow for Russia and Eurasia at the International Institute for Strategic Studies (IISS) , has supported this approach, even arguing that there is no problem with seizing Russian assets, even from a legal perspective.

Meanwhile, Professor Ingrid Brunk at Vanderbilt University Law School (USA) stated: "I would consider it a violation of international law."

Professor Brunk explains that international law protects central banks' reserves from being seized by other countries. This is a principle that has been completely inviolable for the past century.

According to "insiders", the Kremlin has repeatedly warned that confiscating Russian assets would be illegal and erode investor confidence.

Earlier this month, Kremlin spokesman Dmitry Peskov told reporters: "We consider attempts to seize Russian assets to be illegal. Any attempt to do so will lead to very serious legal consequences."

Russia could theoretically seize the assets of some 1,800 Western companies that continue to do business in the country. In May 2024, President Vladimir Putin signed a decree that would allow the seizure of assets from American companies and individuals to compensate for any Moscow assets seized by Washington.

However, according to a report by the Kyiv School of Economics, Russia does not have many advantages. Foreign companies in this country have suffered losses of more than $ 170 billion since 2022. Therefore, Moscow's approach may not be feasible.

Source: https://baoquocte.vn/tai-san-nga-bi-phong-toa-la-con-ga-de-trung-vang-loi-nhuan-bat-ngo-chay-ve-ukraine-chau-au-muon-nhieu-hon-the-308106.html