The debate about the fate of Russian assets seized in Europe and North America has begun to turn into a process that is not much different from the past discussions of Western politicians on this issue. Indeed, European Commissioner for Justice Didier Reynders said on October 31, 2022, that at least the funds of the Central Bank of Russia should not be confiscated, but frozen until Russia voluntarily agrees to the restructuring of Ukraine. According to Reynders, the European Union (EU) has frozen more than 17 billion euros of Russian assets as part of sanctions against Russia due to its invasion of Ukraine. In this context, Reynders said the following:[1]
“More than 17 billion euros of assets of 90 people have already been frozen in seven member states, including 2,2 billion euros in Germany … if the EU confiscates money from the criminal business, they can be sent to a compensation fund for Ukraine. However, this amount is far from enough to finance the reconstruction.”
According to Reynders, 300 billion euros have also been frozen from the foreign exchange reserves of the Central Bank of Russia within the framework of Western sanctions. Reynders said in his assessment, “It seems to me that these 300 billion euros can be kept at least as a guarantee until the time when Russia will voluntarily agree to the reconstruction of Ukraine.”[2]
As it will be remembered, the “Marshall Plan” for the reconstruction of Ukraine was proposed at the conference held in Berlin on October 25, 2022, with the participation of high-ranking EU officials, G7 Ambassadors, international partners, and Ukrainian officials. It is noted that 50 experts around the world are working on the “Restoration of Ukraine” or the “Marshall Plan for Ukraine.” According to this plan, which will take decades, it is envisaged not only to return to the pre-war level but also to make a new leap in European standards in modernization and digitalization for Ukraine. The plan envisaged for the country aims to make the country a member of the EU after the reconstruction of Ukraine and reforms.[3]
On the other hand, the President of the European Commission Ursula von der Leyen, who made a statement at the conference, made a different explanation from European Justice Commissioner Reynders, saying that the main goal is not to freeze Russian assets in Europe, but to confiscate them. However, according to Leyen, the EU does not have the necessary legal framework for this. Nevertheless, the EU is working on it. The purpose of the established temporary expert group is not only to determine where and what is frozen but also to understand what legal conditions exist that can be used to confiscate funds and restore Ukraine. Referring to the estimates of the World Bank, Leyen stated that more than 350 billion euros will be needed to restore Ukraine from September 2022, and said that this figure corresponds to the volume of Russian assets frozen by the EU and the US.[4]
In March 2022, Finance Minister of Russia Anton Siluanov stated that the Moscow administration had lost access to 300 billion dollars of reserves totaling around 640 billion dollars due to sanctions.[5] These are funds, real estate, and other property of individuals, primarily Russian oligarchs, as well as gold and foreign exchange reserves of the Bank of Russia abroad.
On August 30, 2022, Ukrainian President Vladimir Zelensky also stated at the Meeting of the French Initiative Movement that rebuilding Ukraine’s infrastructure after the war will require an expenditure of between 600 and 800 billion dollars.[6] Therefore, while the cost of the war is increasing, it is also being discussed how to use the Russian reserves that Western states keep under control.
While Russia was intervening militarily in Ukraine, one of its main goals was to destroy the country’s military infrastructure. The Moscow administration, which wanted to ensure the surrender of Ukraine by disarming it, had to move away from this goal over time and began to target the civilian infrastructure of the country, not only limiting its attacks to military facilities and strategic assets.
While the damage caused by the war to the country’s infrastructure in the period from February to August 2022 officially cost at least 600 billion dollars, the continuation of the war leads to an increase in this damage. For example, after the attack on the Crimean Bridge, the Russian Army deepened the extent of the destruction by conducting missile and unmanned aerial vehicle attacks on more than ten cities in Ukraine. Moreover, Russia has started targeting Ukraine’s cities, strategic assets, and energy facilities again.
As it is understood, the West stipulates to Russia and states that it can return these assets to Russia, provided that Ukraine is restructured. However, this return is also part of the post-war design. In other words, it is not known how much longer the conflicts in Ukraine will continue. Therefore, the continuation of conflicts continues to leave the Russian economy in a difficult situation. Moreover, even if the end of conflict, Russia will want to spend the reserves held by the West for the development of its own country. In short, even after the war, the issue of Russian reserves on the Russia-West-Ukraine line will remain on the agenda as a controversial issue.
Another factor is the approach of not giving resources to Russia in any way. According to the West, the main source of the Ukraine War is the policy of the Moscow administration. Because the war in Ukraine has also damaged Europe. For example, the Kremlin’s restriction of the flow of natural gas to Europe caused the energy crisis. In this context, an approach has emerged in the form of making the damage paid to the Moscow administration. Therefore, the EU may want to use the assets belonging to Russia for the solution of its problems.
On the other hand, it should be emphasized that according to the West, Russia should be at the table as the losing party in the peace agreement to be signed after the end of the Ukraine War. In this case, the approach of “Russia’s participation in the reconstruction of Ukraine” expressed by European leaders will mean, in a sense, the capitulation that Moscow will accept. In this scenario, it will not be surprising if the EU countries do not return the reserves they hold. In this sense, the West can confiscate frozen assets as compensation for the cost it spent on the Ukraine War.
Consequently, the discussion about how to use the reserves controlled by the West, even though they belong to Russia, related to the plan being considered for the reconstruction of Ukraine continues. Undoubtedly, the prolongation of the war will also increase the cost. In this case, the use of these resources for Ukraine will not make sense, and the West will use these assets either for its own needs or to arm Ukraine.
[1] “Еврокомиссар допустил заморозку резервов Центробанка РФ, пока Россия не начнет восстановление Украины”, Yevropeyskaya Pravda, https://www.eurointegration.com.ua/rus/news/2022/10/29/7149636/, (Date of Accession: 31.10.2022).
[2] Ibid.
[3] Мартина Богуславец, “Новый план Маршалла для Украины: платформа в формате Рамштайн и Фонд восстановления”, ZN.UA, https://zn.ua/macrolevel/novyj-plan-marshalla-dlja-ukrainy-platforma-v-formate-ramshtajn-i-fond-vosstanovlenija.html, (Date of Accession: 31.10.2022).
[4] “Глава Еврокомиссии назвала главной целью ЕС конфискацию российских активов”, Lenta.Ru, https://lenta.ru/news/2022/10/25/konfiskaziya/, (Date of Accession:31.10.2022).
[5] “Силуанов заявил о заморозке половины золотовалютных резервов России”, Lenta.Ru, https://lenta.ru/news/2022/03/13/polovina_rezervov/, (Date of Accession: 31.10.2022).
[6] “Восстановление Украины может обойтись в $600-800 млрд, — Зеленский”, Focus, https://focus.ua/economics/527388-vosstanovlenie-ukrainy-mozhet-oboytis-v-600-800-mlrd-zelenskiy, (Date of Accession: 31.10.2022).
