The EU will increasingly have to answer why the assets of the Bank of Russia are not being used

He emphasized that over the past year in Europe the emphasis on the issue of frozen assets has shifted from the assets of the oligarchs to the assets of the Russian central bank, since the expropriation of private assets will always be a “very specific red line”, and in any case we are talking about several billion euros .

“But it is clear that the question increasingly arises – how can we ask EU or US taxpayers to foot the bill for another 50 billion euros to support Ukraine if the Russian central bank has 200 or whatever billion euros in its account in Belgium?” Keating asked.

He acknowledged that the EU needs to look at all possible aspects before making a decision, but there is a downward spiral between “no, we can’t confiscate assets, maybe we could tax them” and other ideas.

The expert expressed the hope that at the G7 summit in June in Italy, the leaders of countries will come to a positive decision on this issue, and it will be something more than just that the assets of the Russian central bank should be taxed, because in this case it will only be about four billion euros.

“I think the legal arguments are also pretty well settled, there has been good legal analysis that says there are ways in which these assets could be confiscated to Ukraine. Now we need to get people like Christine Lagarde, the president of the European Central Bank, to stop telling political leaders that, you know, if you do this, you might create distrust in the euro. I think this is a stupid argument. The Russian central bank assets were already frozen two years ago and the euro didn’t collapse because of that, people didn’t suddenly sell all their euro assets because they couldn’t trust the euro anymore,” Keating said.

He pointed out that, of course, market fluctuations are possible as a result of such a decision, but after the financial crisis of 2008 and the debt crisis of the eurozone countries in subsequent years, the EU created mechanisms to support the market in case of fluctuations. Of course, no one will want to use these mechanisms again, but at least they exist, and there is already some experience in solving such problems.

Keating also recalled that one of the arguments against the transfer of assets of the Russian Central Bank to Ukraine is that the Kremlin will respond by confiscating European companies in Russia. “But, you know, we are at war! Let’s be honest! If we think that Danone or any other company is more important than the future of Ukraine, then we have a problem. We have to accept that yes, there will be economic consequences. But we had two years to prepare for them!” – the expert emphasized.

Earlier it was reported that EU High Representative for Foreign and Security Policy Josep Borrell said that the European Commission (EC) would propose using profits from frozen Russian assets to help arm Ukraine. The EC assumed that 90% of the profits from frozen Russian assets would go to a fund that would cover the cost of Ukrainian weapons. The remaining 10% will go to the EU budget to help increase the capacity of Ukraine’s defense industry.

Following Moscow’s re-invasion of Ukraine in 2022, the EU, US, Japan and Canada froze approximately US$300 billion of Russian central bank assets. About $200 billion of these funds are held in European financial institutions, mainly in the Belgian clearing house Euroclear. So far, EU countries have not been able to agree on what to do with frozen Russian assets.