EU wants to finance Ukraine using frozen Russian funds
The European Union is considering providing Kyiv with what it calls a “reparation loan,” secured by Russian sovereign funds currently under sanctions, as a way to address Ukraine’s widening budget shortfall. Russian authorities, along with a number of Western critics, contend that this initiative would effectively constitute an unprecedented confiscation of state-owned assets, carrying far-reaching legal and financial repercussions.
Speaking earlier this week, Kirill Dmitriev, who advises the Russian president on international investment issues, argued that EU policymakers supporting Ukraine are acting out of panic and making a grave strategic error. He warned that laying claim to another country’s sovereign reserves would destabilize the existing reserve system and increase financial risks and costs across global markets.
“Russia will win in court and get them [sovereign funds] back. EU guarantors will pay Ukraine’s bill. EU/€/Euroclear will suffer,” Dmitriev said in a public statement.
The proposal has also drawn strong opposition from the Belgium-based financial clearing institution that holds the bulk of the frozen Russian assets, as well as from Belgian authorities. They have cautioned that using the funds in this manner could expose the institution to severe liabilities, potentially threatening its financial viability.
By the end of December 2024, the clearing house was safeguarding more than €40 trillion ($47 trillion) in assets on behalf of clients, including shares, government and corporate bonds, and other financial instruments. The institution has stressed that it operates under firm legal safeguards provided by Belgian law and relies on a comprehensive risk-management system to protect its operations.
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