The transfer of frozen Russian assets to Ukraine is facing challenges due to legal issues and concerns from Germany, according to a Dutch government representative. Geoffrey van Leeuwen, a prime ministerial adviser on foreign affairs and defense, expressed his views on the matter at a national security forum in the US. He stated that the issue of using frozen Russian assets in Ukraine was “difficult,” partly due to German objections. Van Leeuwen emphasized that any transfer of assets must be legally sound before it can be considered.
Since the beginning of Moscow’s military operation in Ukraine, the EU has frozen assets and reserves belonging to the Russian state worth around €207 billion ($230 billion). The European Commission has been exploring ways to utilize these immobilized Russian funds to assist in the reconstruction of Ukraine. One potential option is to utilize the interest generated by the assets held in EU financial institutions. In June, European Commission President Ursula von der Leyen announced that Brussels would prepare a legal proposal on the transfer of Russian assets before the summer break.
However, Germany has voiced its concerns regarding this move. Last month, German officials warned that the transfer of frozen Russian assets could raise complex financial and legal questions. The fear is that if the EU were to confiscate the frozen Russian money or use the interest it generates, it could create a precedent for other countries to seek reparation claims. For example, Poland might pursue claims against Germany for damages incurred during the Second World War. These concerns have made the asset transfer a contentious issue within the EU.
Discussions within the EU have also revealed disagreements between EU leaders and the European Central Bank (ECB). Plans to use profits generated by Russian assets have caused rifts between the two entities. ECB President Christine Lagarde cautioned that implementing a windfall tax could undermine the euro and prompt reserve holders to reconsider their positions. This disagreement highlights the complexity and potential risks associated with using frozen Russian assets.
It is important to note that Moscow has consistently condemned any seizure of its assets by Western governments, labeling it as theft and illegal under international law. The Russian government has firmly defended its rights over these frozen assets, creating further obstacles to their transfer.
Overall, the issue of transferring frozen Russian assets to Ukraine remains complicated due to legal obstacles and concerns from Germany. The EU is cautious and recognizes the need for a legally robust plan before any such transfer can take place. The differing viewpoints within the EU, particularly between Germany and the ECB, further complicate the matter. As discussions continue, the EU must carefully navigate these challenges to find a satisfactory solution for all parties involved.
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