Confused about why Ukraine can’t just grab Russian frozen assets to fund its fight? We’ve got you covered, from Euroclear to REPO Act.
Russia started its unprovoked full scale invasion of Ukraine 864 days ago. Putin knows he cannot win the war but he continues it despite enormous losses of Russian military personnel and equipment. And he certainly hasn't done anything for Russia's reputation as a competent military power.
If these sorts of losses don't do anything to make Russia change course, it's time to seize Russian assets and use them to defend and rebuild Ukraine. But there's some reluctance to do so in some countries.
The biggest slice of the pie is Russian state assets (reserves of the Russian Central Bank, Russia’s central financial institution) – approximately $300 billion. They’ve been frozen in banking institutions across the G7 countries. So why are these assets parked there in the first place? At the time of Russia’s full-scale invasion of Ukraine, Russia kept some assets in money and securities abroad in reliable banks, scooping up foreign currency. The lion’s share of these assets, €192 billion, is held in Euroclear, a financial institution headquartered in Brussels specializing in the safekeeping and settlement of securities. The rest of the assets’ exact size and location are a bit of a mystery since that information is classified, but it’s a safe bet that a hefty chunk is in the USA.
The USA, you say? Now that the US Supreme Court has given presidents immunity, Biden should just scoop up all that Russian loot and put it into an account which Ukraine could draw from for its national security and reconstruction. 😉
Our G7 partners are a bit more skittish about seizing Russian assets. This is what happens when certain countries become too dependent on Russian fossil fuels and other trade with Russia.
One big step forward to the confiscation of these funds was the US passing the REPO (Rebuilding Economic Prosperity and Opportunity for Ukrainians) Act on 23 April 2024. While successfully implementing it depends on further actions and certifications, the REPO Act lays out a legal mechanism for asset confiscation, gives the President the power to start the confiscation process, and allows for coordination with G7 countries, the EU, and other partners. It could potentially give Ukraine access to several billions of Russian sovereign assets located in the US. However, the G7 did not follow the US’s lead. Instead, on 3 May 2024, the Financial Times reported that the G7 was no longer considering a full confiscation of frozen Russian assets for Ukraine, with an official saying that these assets could be used as leverage in potential peace negotiations with Russia. This stance fails to recognize Russia’s true objectives and the pointlessness of using these assets as a bargaining chip, given Russia’s continued escalation of aggression and substantial revenues from fossil fuel exports.
On a slightly different note, the change in government in the UK will make no difference regarding support for Ukraine. It's one area where Labour and the Conservatives see eye to eye. Labour Prime Minister Keir Starmer visited President Zelenskyy in Kyiv last year.
Sir Keir spoke with President Zelenskyy on Friday – his first day in office.
Zelenskyy had a conversation with the new British Prime Minister: an unprecedented agreement was discussed
