What are Frozen Assets? Who freezes them?
Frozen assets are financial resources or real estate that their owner cannot access or use for transactions or transfers due to restrictions imposed by a government or bloc, such as the European Union in this case.
In the case of Russia, state assets – in the form of cash, bonds and securities abroad – as well as private assets, such as yachts and real estate owned by sanctioned Russian billionaires, were frozen.
Assets frozen by sanctions
“The process of freezing assets falls to financial institutions,” such as commercial banks or central securities depositories, which must block transactions and block access to frozen assets, Agathe Demarais, senior researcher at the European Council on Foreign Relations (ECFR), told DW.
Why were Russian assets frozen?
The measure to freeze Russian assets was implemented as part of sanctions imposed after the invasion of Ukraine in 2022. The measure was intended to restrict Russia economically and ensure that this money could not be used to finance the war.
Where are the Russian assets?
Of the total of around 300 billion euros in frozen assets, around 210 billion euros fall under the responsibility of the EU member states. The rest is spread across the USA, Japan, the UK, Switzerland and Canada.
But the largest part, 180 billion euros, is in an institution called Euroclear in Belgium.
What is Euroclear and why is it against the EU using Russian assets?
Euroclear is a large financial market infrastructure company described as a “securities depository”.
Euroclear fears that its reputation among international investors will be damaged by the seizure of Russian funds and that this could even lead to Moscow filing a lawsuit. The Russian central bank has already decided to sue Euroclear for 230 billion euros to recover both the frozen money and the lost interest.
Which countries want to use Russia’s assets and for what?
Most European countries, including Germany and France, want Russia to pay for the damage caused to Ukraine.
Which countries do not want to use Russian assets and why not?
From a legal perspective, it is questionable whether the capital can be used to support Ukraine. Belgium vetoed the proposal for fear of legal problems with Moscow. Italy, Malta and Bulgaria want to look for other alternatives to help Ukraine.
What happens to frozen assets?
They remain immobilized. No transactions or transfers are possible to Russia either.
The EU used the financial gains from the assets held at Euroclear to pay the first tranche of 1.5 billion euros to Ukraine in mid-2024.
What is the US position on the use of Russian assets?
Under President Joe Biden, the United States, which had less than 5 billion euros in Russian assets, agreed to use those interests to help Ukraine. The current Trump administration wants to use some of the frozen Russian assets for joint projects with Moscow.
What does Trump’s peace plan say about frozen assets?
According to the leaked version of Trump’s original peace proposal, broken down into 28 points, 86 billion euros in frozen Russian assets would be invested in “U.S.-led reconstruction and investment efforts in Ukraine,” with the United States receiving 50 percent of the proceeds.
According to Agathe Demarais of the European Council on Foreign Relations, Trump wants to withdraw this money from frozen Russian assets in Europe and use it to benefit both his government and American companies.
The rest of the frozen funds, which exceed 200 billion euros, should flow into a joint Russian-American investment instrument “to create a strong incentive not to return to the conflict,” the proposal says.
Why did the EU “indefinitely freeze” Russian assets?
The EU’s decision to “indefinitely freeze” Russian assets achieves two goals: on the one hand, it eliminates the need to renew the measure every six months, thus bypassing Hungary’s possible veto. On the other hand, it protects US funds. “The measure also paves the way for the EU to grant Ukraine a loan,” emphasizes Demarais.
(rmr/ms)
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