The ongoing dispute over Russia’s frozen assets intensifies

The European Union is nearing a decision on utilizing the interest earned on Russia’s frozen foreign reserves to support Ukraine following Russia’s invasion in 2022. The decision to freeze Russian assets was part of broader sanctions to halt aggression. Elina Ribakova of the Kyiv School of Economics stated that the sanctions significantly restricted Russia’s financial maneuverability. The frozen assets include various financial instruments and holdings, totaling around €275 billion in central bank assets. There are discussions in the US and UK about using these funds to support Ukraine. The EU, with the majority of the frozen assets located in Europe, is considering seizing the interest earned on the reserves to assist Ukraine. This move is seen as a legal and less risky alternative. Russia has threatened “symmetrical measures” by nationalizing Western companies’ assets within its borders. This tit-for-tat strategy is a response to potential asset seizures by the West. The West faces challenges in navigating legal constraints while trying to contain Russia’s aggression. While fears of breaching sovereign asset immunity linger, Russia’s actions show a willingness to disregard international law. As political tensions rise, experts warn that the time for caution may have passed. The EU’s potential decision to utilize interest earned on frozen assets signals a strategy to mitigate risks and support Ukraine in the face of ongoing aggression.

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