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| About $300 billion in Russian assets are frozen in the West. Illustrative photo. (Source: CNN) |
US takes strong action, Russia threatens "retaliation"
CNN quoted a senior US official as saying: "The White House and the US government believe that Russia will be held responsible for all the damage they have caused in Ukraine."
However, the officials said the rare move would require participation from US allies in the Group of Seven (G7).
Officials explained that most of the frozen assets of the Russian central bank are held by EU countries.
The US proposal would ask Congress to pass a bill introduced last year - known as the REPO Act - that would give the president the authority to seize Russian assets in the country.
Senior Biden officials have been working with G7 allies and the EU to refine the proposal, which is being further discussed ahead of February 22, the two-year anniversary of the Russia-Ukraine conflict.
The proposal was discussed among senior leaders at G7 meetings in November and December and is expected to be revisited at the next G7 meeting in late February, a US official said.
Speaking about the proposal, a European official said the EU has more to lose because, unlike the United States, the 27-member bloc holds the bulk of Russia’s assets. Seizing Moscow’s reserves would show other countries that sovereign wealth held in Western currencies may not be safe.
To reassure allies, the US said the asset seizure would be carried out on a very specific legal basis and would not risk scaring financial institutions with assets held abroad.
Given Washington's determination, Moscow is preparing to resist any US or European attempts to seize frozen Russian Central Bank assets to support Ukraine.
Bloomberg sources revealed that Russia has hired international law firms and authorized observers to protect its interests in court.
Russian Central Bank Governor Elvira Nabiullina called the possibility of asset freezes "a very negative signal for all central banks."
Kremlin spokesman Dmitry Peskov denounced the freezing of Russian assets as a violation of the basic principles of reserve security.
"There are no legitimate grounds for confiscating assets and the litigation could drag on for decades. Russia has prepared a list of Western assets that could be seized if the G7 decides to seize $300 billion in frozen Russian assets," Dmitry Peskov stressed.
What is the EU "worried" about?
At the present time, experts see that Western countries are determined to overcome obstacles to provide financial and military support to Ukraine, so the confiscation of Russian assets could be a "bitter pill".
For nearly two years, there has been a debate over what to do with the $300 billion in frozen Russian funds. The G7 countries agreed that the money could not be returned to Russia until Moscow provided compensation to Ukraine.
As such, the money will be frozen until the particular military campaign ends, as has been the case in most conflicts so far.
However, Ukraine is demanding that the frozen money be transferred now so that the country can support its economy.
Experts say Washington appears to be on Kiev's side, but the reality is that almost no Russian assets are held on US soil.
Meanwhile, the most active supporters of the confiscation proposal are countries that do not have many Russian assets: Britain, the Baltic states and Central European countries.
Belgium, France and Germany have been more cautious, concerned about investors pulling assets out of Europe and retaliation from Moscow.
Belgium - which began its six-month presidency of the European Council earlier this year - is also concerned about the euro's weakening position on financial markets.
Experts predict that the US will most likely try to pass a compromise measure, such as taxing 100% of income from the frozen $300 billion.
The most intense discussion on the issue is expected to take place next February, when leaders of the EU and G7 countries meet to find ways to support Ukraine.
| After Moscow launched a special military operation in Ukraine in February 2022, the US and its allies banned transactions with the Russian Central Bank and Ministry of Finance, freezing about $300 billion in assets in the West. Most of these assets were bonds and deposits in euros, dollars, and pounds. |
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