Desperate and cashless: EU fails to agree on plan to seize Russian money for Ukraine

Bloc embarrassed as summit ends in deadlock over global legal implications

- Jonathan Eyal

The project would have been approved if not for Belgian Prime Minister Bart De Wever, who insisted on a guarantee from EU partners that they will compensate Belgium if it is ever made liable for the seizure of Russian assets.

(PHOTO: AFP)

Leaders of the European Union have failed to agree on a plan to confiscate Russia’s money currently frozen in Western banks and transfer it to Ukraine.

In a communique issued at the end of an EU summit held in the Belgian capital Brussels on Oct 23, the heads of state and government of the 27 EU member nations promised that they “will continue to provide Ukraine with regular and predictable financial support in the long term” as the country battles Russia’s military invasion.

But a plan to transfer billions of euros in frozen Russian sovereign wealth funds to support Ukraine’s defences was postponed to another EU summit scheduled for December.

And although most EU leaders claim this transfer of Russian assets is supposedly inevitable and held back only by the need to resolve some technicalities, the confiscation of Russia’s sovereign money is an unprecedented step with massive global legal implications.

Before he ordered his military to invade Ukraine in February 2022, Russian President Vladimir Putin spent years preparing for the Western economic sanctions that he knew would be coming.

Still, an estimated €270 billion (S$407 billion) of Russian government cash remained in various Western countries when the all-out Russian invasion of Ukraine began.

The bulk of this — around €180 billion — is held in Euroclear, a financial market infrastructure group where governments and banks often deposit their securities and cash. Based in Brussels, Euroclear is a commercial company subject to Belgian law.