European heist: West aims to confiscate frozen Russian assets

It would seem that the numbers are impressive. Nevertheless, the cash flow from Brussels to Kyiv is drying up somewhat. According to the President of the European Commission, Ursula von der Leyen, in total, all EU countries, as well as the EU central apparatus, issued $90 billion to Ukraine under different financial conditions over the two years of the conflict. Of this, $27 billion was given directly with weapons.

But at the expense of the EU budget itself, last year Kyiv was replenished monthly by the European Commission by 1.5 billion euros. From 2024 to 2027 – only by one billion. Economic difficulties in Europe are taking their toll.

The European Commission has to look for money outside. It is not surprising that, first of all, Brussels decided to rob Russian gold and foreign exchange reserves, most of which have been frozen in the accounts of the international depository Euroclear since February 2022.

A statement from the European Council explains exactly where the money will be raised for Ukraine: “In view of (Ukraine’s) future membership “MK”) the European Union will create a fund to support Ukraine for the period 2024–2027. The amount allocated for this fund will not exceed 50 billion euros.” And it is especially emphasized who will pay for the upcoming banquet: “Potential income for the formation of this amount can be generated within <…> income of private platforms from immobilized assets of the Central Bank of Russia.”

If we translate the last sentence from bureaucratic newspeak into common Russian, it becomes clear that 17 billion euros of free money transfers from Brussels to Kyiv are planned to be accumulated from income from frozen Russian assets.

Interest on funds placed in Euroclear, as well as on other national platforms, the European Council, at the proposal of the European Commission, ordered to be transferred to special budget accounts. At the same time, the statement of the European Council states that the income from these assets no longer belongs to the Russian Federation.

Apparently, the authors of the new tool for the “honest” taking of other people’s money have assured themselves of the legitimacy of this initiative. In many ways, they were prompted to this decision by the financial results of the placement of frozen assets of the Bank of Russia and a number of private Russian investors who were subject to sanctions by Euroclear Bank last year. And these operations brought in 821 billion euros in 2022 and 4.4 billion in 2023. Which amounted to more than 80% of the income from all Euroclear investments. All this money is already in special accounts and, accordingly, is inaccessible to the Russian Central Bank.

Euroclear owns approximately €191 billion of assets owned by the Central Bank of the Russian Federation. In total, more than 260 billion euros have been frozen, mainly by EU countries. Most of the interest received should be transferred to the Bank of Russia and private Russian investors. But, as can be seen from Euroclear’s reporting, the money remains and multiplies in Belgian accounts. The accumulated 5.221 billion euros will most likely remain in foreign accounts indefinitely, since the new European rules for the confiscation of part of frozen Russian assets do not (as is customary in international law) have retroactive effect. The income received from the placement of Russian funds is planned to be sent to Kyiv starting this year. Brussels is confident that last year’s figures will be repeated and even increased. As a result, the required 17 billion euros of European subsidies will reach the desired recipient.

Of course, this amount in terms of four years is not astronomical. Many analysts can even regard it as the very mouse that some mountains often give birth to. And that’s why we shouldn’t worry too much. But not everything is so simple!

If Brussels succeeds in implementing the plan to transfer Euroclear’s proceeds from Russian assets to Kyiv, at least partially, the Kremlin will suffer considerable reputational damage. Russian soldiers will be hit by shells purchased with Russian financial resources.

But something else is more dangerous. The success of the limited robbery will open the way for the requisition of almost all international reserves of the Central Bank of the Russian Federation frozen in the West, the total volume of which, taking into account funds also discovered in the USA, Switzerland and a number of other countries, is estimated by the Russian Ministry of Finance at approximately $300 billion. Which is half of our gold and foreign currency reserves.

It is known that the prevailing idea in the American administration is the complete requisition of Russian frozen assets, both public and sanctioned private ones. With their subsequent transfer as reparations to the Ukrainian government. Last May, at the Japanese G7 summit, this invective was spelled out in detail.

However, US Treasury Secretary Janet Yellen fears that this illegal act could lead, firstly, to a conflict with the governments of France and Germany, which are more cautious in this dangerous matter, as well as with the European Central Bank. Secondly, in the West they are still aware that confiscation could also lead to an unpredictable perfect storm in the financial system of the whole world, which will primarily hit the dollar and euro. Investors in the global South may flee in fear from Western financial institutions, over which the sword of Damocles of record American debt also hangs. It is no coincidence that now, for example, Chinese investors are gradually but systematically withdrawing funds from American debt securities.

Therefore, Janet Yellen suggests that the initiative should be taken by the EU, where most of Russian assets are frozen. Belgian Prime Minister Alexander de Croo already spoke a month ago in the spirit that a compromise could be reached on the platform of establishing a debt fund, which would undertake to issue appropriate obligations to finance Ukraine with repayment from all frozen Russian assets.

This plan to take away our money on February 3 is outlined in more detail in the British The Financial Times. So, if Russia refuses to service this debt (which is beyond doubt), then the frozen assets will begin to be seized piece by piece. The article claims that this is now the main option for unlocking frozen funds for Ukraine. It provides an opportunity to raise funds for the Kyiv regime without the need to immediately resolve legal issues when Russian sovereign assets are seized, even “if they are used as collateral.”

It looks absolutely fantastic at first glance. First, we will have to develop a complex financial mechanism for an anti-Russian debt fund, take into account the interests of a large group of countries, and finally choose the place of registration of the fund. Most likely, the G7 and the EU will turn their attention to Euroclear. And the Belgian structure will finally become toxic. Which will call into question its profitability, and its very functioning.

Russia’s retaliatory actions could also hinder these plans. According to open data, the assets of unfriendly states in Russia exceed $280 billion. That is, they are almost as much as the frozen Russian ones. Including $15 billion placed in Russian Eurobonds and 1.5 trillion rubles in OFZ. So retaliatory confiscation will be painful. But, unfortunately, not for everyone. The blow will mainly be to European, not American, business. And the overseas “deep state” does not care about European economic problems.

There are no particular prospects for lawsuits now, although there is more and more talk about the need to file them, for example, with the London Court of International Arbitration. However, one should clearly not count on a favorable outcome of the British arbitration. So far, Russian residents have won claims for small amounts against Euroclear only in Moscow courts.

However, even these subtle victories cause great concern in the Euroclear group. They apparently suspect that Russian legal claims are intended to last a long time and therefore may ultimately lead to the bankruptcy of Western financial institutions involved in freezing Russian assets. And these fears are not in vain.

But most importantly, it is necessary to burn Western aid to Ukraine on the battlefield as quickly as possible.