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22 May, 2024 11:47

Moscow condemns EU ruling on frozen assets

The bloc’s approval of the use of windfall revenues to help Ukraine is “expropriation,” the Kremlin has said
Moscow condemns EU ruling on frozen assets

The EU’s decision to use proceeds from frozen Russian assets to aid Ukraine violates the foundations of the global financial and economic system, Kremlin spokesperson Dmitry Peskov has said.

After months of deliberation, the bloc approved the use of windfall revenues generated by immobilized Russian assets to provide military aid to Kiev on Tuesday. Several EU member states, including Germany and France, had previously resisted pressure from the US and UK to outright confiscate the Russian assets, citing concerns that such a drastic move would have no legal basis.

Under the regulation adopted by the European Council, central securities depositories holding Russian sovereign assets and reserves worth more than €1 million will make a financial contribution from their corresponding net profits accumulated since 15 February 2024.

At a press briefing on Wednesday, Peskov described the decision as “expropriation.” He also warned that Moscow would assess the possible consequences of the move and consider an appropriate response.

Such decisions, despite being “stripped-down,” are still “potentially dangerous,” Peskov said. The EU understands the imminent danger it has put itself in by taking this decision, he claimed.

“The stripped-down version [of the plan to use profits from Russian assets] is nothing short of expropriation,” he stated. Expropriation is a term describing an action by the state or an authority of taking property from its owner for public use or benefit, or the action of dispossessing someone of property.

In an amendment to Tuesday’s regulation, the European Council stated that the EU plans to keep the interest generated from immobilized Russian assets, even after sanctions on Moscow are lifted.

“Unexpected and extraordinary revenues do not have to be made available to the Central Bank of Russia… even after the discontinuation of the transaction prohibition,” read the amendment published on Wednesday.

According to the European Council, the windfall revenues “do not constitute sovereign assets,” therefore “the rules protecting sovereign assets are not applicable” to them.

After the start of Moscow’s military campaign against Kiev in February 2022, Western states blocked around $300 billion in Russian state assets, the bulk of which is located in EU countries. The annual revenue from these funds is expected to be around $3 billion.

Western officials had floated a number of proposals for using the funds, ranging from outright seizure to using them as collateral to secure loans for Kiev. Another idea was to use profits from Russian assets to support Ukraine’s procurement of weapons.