The European Union is considering using the interest generated from frozen Russian assets to help rebuild Ukraine after the war, according to an EU official. This idea has been under consideration by the bloc since last year, but there have been concerns about the legality of such a move.
Rebuilding Ukraine is a significant challenge for the EU, as it is estimated to cost $411 billion over 10 years, according to the World Bank. This estimate includes the reconstruction of infrastructure and housing projects. Finding funding for this massive endeavor has been a top priority for the EU.
“It’s the best way of using these assets in accordance with EU and international law,” said Anders Ahnlid, the director general of Sweden’s national trade board and the head of the EU working group on frozen Russian assets. Ahnlid believes that using the interest generated from these assets would be a lawful and effective way to support Ukraine’s reconstruction efforts.
The frozen Russian assets are likely to generate around 3 billion euros, or $3.3 billion, each year. However, if the interest proceeds were the sole funding source, it would take at least 124 years to fully rebuild Ukraine. Recognizing this limitation, the EU has also explored other options, such as seizing Russian assets and reinvesting the proceeds or taxing their profits.
Seizing and using Russian assets for the reconstruction of Ukraine is a legally complex process. The ownership of the assets would need to be changed, and this would involve different legal procedures in various jurisdictions. Additionally, the involvement of international bodies, such as the United Nations or the International Criminal Court, would be required to seize state assets. These challenges have raised concerns about the legality of such a move.
Even Treasury Secretary Janet Yellen has acknowledged the legal complexities of seizing Russian assets, stating that it is not legally permissible in the United States. The Kremlin has also opposed the notion, calling it outright theft. It is clear that finding a lawful and feasible solution to utilize the frozen Russian assets remains a significant challenge for the EU.
At present, the European Commission and the Kremlin have not responded to requests for comment on this matter. The EU will continue to explore viable options and work towards finding a sustainable and legal solution to support Ukraine’s reconstruction efforts.