Is it legal or theft? EU begins tapping frozen Russian money
Reuters News Agency reported last week that the EU has begun with the redistribution of frozen Russian funds. The frozen, not officially confiscated, money will be used to compensate Western investors who lost their assets in Russia. According international law it’s a crime.
Moscow has condemned the asset freeze, arguing that it violates international law and undermines the global financial system. The Kremlin previously stated that it will take legal action against those involved in the seizure of its assets.
In response to the escalation of the Ukrainian war in 2022 the EU froze Russian sovereign and private funds for a substantial amount of money.
At the moment approximately € 200 billion is held by Euroclear.
In the meanwhile the frozen assets already generated billions of interest.
For the first time in July last year the EU transferred 1.55 billion euro to Ukraine. Euroclear noted that changes to the bloc’s sanctions regime adopted in 2024, allow the disbursements. But in legal terms this is confiscation.
Many legal experts doubt the validity of the Euroclear stance. Russia retaliate they also will use the income from frozen assets of Western investors.
Is what happens in the EU based on democratic principles?
Among EU member states, on the asset freezing subject, is no consensus at all. EU foreign policy chief Kaja Kallas admitted that some member states still oppose the move to drain the funds.
The Russian authorities have initiated a massive amount of court cases against Euroclear. There is no verifiable information about the current status.
But, is this ordinary theft and money laundering or is it o.k.? That’s the question. The legality of spending frozen Russian assets by the EU is legally complex and politically contentious.
As of today, the frozen Russian Central Bank assets are still legally owned by Russia. Freezing assets is in legal terms completely different to confiscation.
Confiscation i.e. transferring ownership or spending those funds is currently not legal under international or EU law.
For confiscation you need a clear legal ruling as a court order, the existence of a treaty or international legal framework that permits it e.g. as reparation payments following a war.
The final conclusion for now is that the EU is acting illegal.
Spending frozen Russian state assets, such as those of the Russian Central Bank, is a violation of both international and EU law.
It is theft and money laundering. Formally it’s a criminal act and those involved are liable to prosecution.