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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher
The International Monetary Fund will assess at the appropriate time the unfreezing of Russian assets for later use, said the financial institution’s deputy managing director, Gita Gopinath. Her statement was on February 12, the same day that the European Union approved the decision to use frozen Russian assets for Ukraine’s reconstruction, a decision that risks the image of the West as a safe destination for non-Western assets.
“Decisions about what to do with the assets rested solely with countries holding them,” she said when asked about the possibility of taking frozen Russian assets and dedicating them to the reconstruction of Ukraine.
While Gopinath noted the IMF would not be involved in the discussions and decisions countries make on frozen Russian assets, she also said that “the impact of any decisions taken on member countries” and “the global economy” will be assessed.
The deputy managing director stressed it was important to “make sure that whatever you’re doing has sufficient legal support for it so that you don’t end up with risks down the line.”
Despite Gopintha’s warning of risks, the G7 and the European Union have been discussing for months a plan to seize Russian assets frozen in Western banks and send them for Kiev’s use, with the latest reports saying that Ukraine will be financed with zero-coupon bonds issued by Western countries, which will be guaranteed by assets of the Central Bank of Russia frozen in Western countries. Under this plan, designed by Belgium, which froze €191 billion worth of Russian assets, the West will start financing Kiev now and will postpone the issue of confiscating the funds until later.
The Council of the European Union approved the decision to retain income from Russian assets for Ukraine’s use on February 12.
“The Council today adopted a decision and a regulation clarifying the obligations of Central Securities Depositories (CSD) holding assets and reserves of the Central Bank of Russia (CBR) that are immobilised as consequence of EU’s restrictive measures,” the Council of the EU statement said.
The Council decided that “CSDs holding more than €1 million of CBR’s assets must account extraordinary cash balances accumulating due to EU restrictive measures separately and must also keep corresponding revenues separate.”
This decision, the text specifies, “paves the way for the Council to decide on a possible establishment of a financial contribution to the EU budget raised on these net profits to support Ukraine and its recovery and reconstruction at a later stage.”
Around €300 billion, or almost half of the Bank of Russia’s monetary reserves, were tied up in the EU and G7 countries following the launch of the Russian military operation in Ukraine in February 2022. The Kremlin has pointed out on more than one occasion that this confiscation would violate all the norms of international law and called it “economic banditry.”
According to the Financial Times newspaper, Germany and France declared the need to find a legally invulnerable mechanism to seize Russian funds, fearing that a simple confiscation could undermine other countries’ confidence in the West as a safe place to store assets without the G7 being viewed as a global pariah. However, the only way the West can avoid achieving such an image in non-Western countries is by not using Russia’s frozen assets for the reconstruction of Ukraine, to begin with.
Not caring an iota about the long-term effects the EU’s decision could have on its image abroad, Ukrainian Foreign Minister Dmytro Kuleba welcomed the announcement on X (formerly Twitter), saying, “We encourage further steps to enable their practical use for Ukraine’s benefit. These steps must be ambitious and prompt.”
Kuleba is desperate for these “ambitious and prompt” steps to be taken because to move the assets into escrow, individual countries where the assets are held may need to pass legislation to allow it, and as Axios noted, “many countries in Europe still need to be convinced.”
The G7 nations will likely want to make progress on some details of a framework at their next meeting, a source familiar with the matter told Axios.
With the G7 comprising Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union, it remains to be seen where major domestic opposition to using frozen Russian assets for Ukraine’s use could come from. It is unlikely that the tarnishing of its image to non-Western countries will be enough to deter the West from this action.
The acceleration of the dollarisation process was an obvious outcome of sanctions on Russia, yet this was not estimated or considered by Western policymakers, meaning that the West could very well be naïve or ignorant to the fact that non-Western countries will begin withdrawing their assets if Russian assets are illegally used for Ukraine’s benefit. This will certainly have long-term effects as tens of billions, if not hundreds of billions, will be taken out of the West and to safer destinations.
kuleba is yet another laughable, “younger generation” cunt, trying to groom his image as a successor to the eventual ukronazi throne.
images and biographical information of this clown suggests a pompous, sheltered imbecile… backbone removed, a long time ago.
keep at it libtarded ukronazi wannabe….
another jew. not a single ukrainian in sight in that government at any high position. jews a tiny minority but make up the majority of the government wtf.
and that is how the entire planet is supposed to look like in the end. we will see if china, india and iran will let it happen. the others are allready taken.
not just ukraine, the entire us establishment is also full of them. oy vey.
de-dollarisation is the (key) word
russians should prevent erdogan and his master’s of nato not to participate in any rebuilding of ukraine.but should eliminate all terrorist in ukraine.
shut yur stupid hol..
western bankers are the worst thieves of all. they can legalize and propagandize their crimes and usually get away with it as when boe confiscated russia’s wealth when the tsar was killed after refusing him asylum. now they risk their all important reputation by politicizing international law .
lol they know they won’t get ukraine in the end. they just want to steal those russian assets in europe for themselves while pretending it’s for ukraine that won’t even exist. they can’t legally just steal them, so their spin is that they will use it for a “noble cause” rebuilding ukraine. lame greedy psychopaths.
russia’s central bank and putin must have known that confiscation of funds is in fact a consistent western practice; it is neither new nor surprising. nor does moscow appear to be setting the return of those funds as a condition of a settlement with the ukraine or with the eu. it is always easier to steal property that its owner does nothing to protect.
russians have objected to ese seizures and is seeking to attack it legally in international courts and arbitration. also western businesses like macdonalds, starbucks and renault car factory have sold to russia ownership for virtually nothing. long term this western business lost has more value than the seizure of russia assets in the west. so the west is losing alot and russia has taken over western business for free.
what’s the garantee? the alaska?
wasn’t it the eu that invented investor–state dispute settlement (isds), or an investment court system (ics), for its trade agreement, after realizing that nobody was prepared to invest money in unstable dictatorships where the ruling junta was prone to steal investors money at will?
“legally invulnerable mechanism ” to “move funds into escrow” from where “they might contribute to eu budgets?” that’s not the talk expected of democratic representatives of world citizens.
western system is colonial extrative by nature: they print money and slave countries have to give their natural resources in exchange. their arrogance stealing russian assets without hiding behind non sensical international law will help make it clearer. the whole european aristocratic octopus, centered around london has to be guillotined
ass stupid eu – now no one will invest to eu.
oceanian countries replaced china as their most important trading partner, which used to be the eu