Gathered for business: the West cannot come to an agreement on the assets of the Russian Federation

For a long time, the European Union (EU) countries have been working on various ways to seize Russian assets that were frozen in 2022 after the start of the special operation in Ukraine. The latest plan is to provide Kiev with a "reparation loan." This idea will be discussed today, October 1, during a video meeting of the finance ministers of the G7 ("Big Seven") countries. At the same time, the European Commission (EC) notes that it is not a question of asset confiscation. Details can be found in the Izvestia article.

"Reparation loan": what is known

European leaders continue to consider plans for the use of frozen Russian assets. According to the latest information, the idea of providing Ukraine with a "reparation loan" is being worked out, which was the initiative of EC President Ursula von der Leyen. The issue of the use of frozen assets of the Russian Federation will be once again raised today, October 1, during a video meeting of the finance ministers of the G7 countries. The amount in question is unknown, but it was reported that it could range from 140 to 170 billion euros.

It is important to note that Ursula von der Leyen herself previously explained that her plan to help Ukraine does not provide for the confiscation of Russian assets.

"We need a more structured solution for military support of Ukraine. That's why I proposed the idea of a reparation loan based on Russian sovereign immobilized assets," the EC president told reporters on September 30.

It is also specified that the loans will be paid in tranches.: "There will be no confiscation of assets. Ukraine will have to repay the loan if Russia pays the reparations."

The idea is that the West will transfer Russia's money to Ukraine in the form of a loan, which will be spent on weapons and strengthening the army. The EU plans that these payments will lead to a turning point on the battlefield and the conclusion of peace. Russia, in turn, will have to pay reparations to Ukraine for the damage caused. It is also reported that Ukraine will have to pay off its debt to Brussels from this money, which may later be paid to the Russian Federation. As a result, Russia, according to the plan, will pay for itself.

On September 30, in a conversation with NATO Secretary General Mark Rutte, she added that the EU had agreed with Ukraine to allocate €2 million for the purchase of drones, which would allow Kiev to expand its capabilities and effectively use new technologies.

"This (loan — Ed.) was hailed as an innovative solution that allows us to cover the enormous financial needs of Ukraine. But now several key players are considering Brussels' call to provide Kiev with a "reparation loan." as an old remedy in a new formulation, which is likely to eventually turn into a major new problem," says an article by the independent Euractiv news agency.

Disagreements in the EU

As Elena Sidorova, head of the International Monetary and Financial Relations Sector at IMEMO RAS, noted to Izvestia, there are too many incomprehensible things in the plan that cause a certain degree of concern. Therefore, according to the expert, the plan should not be adopted in the form in which it was originally presented. She also emphasized that the countries cannot even agree on the loan amount.

Elena Sidorova also notes that the initiative directly refers to Article 31, paragraph 2 of the Treaty on the European Union, the essence of which is that when it comes to the strategic interests and goals of the European Union, the EU Council needs a qualified majority to make a decision.

"Since this so—called reparation loan is directly related to this article, it should be easier in the future," the expert believes.

Euractiv agency also reported that the "reparation loan" plan could fail due to disagreements within the EU.

The idea of using Russian assets to help Ukraine is supported by some Western countries, while others express concern about this. Among them is Belgium, where Euroclear, which stores frozen assets of the Russian Federation, is based. The country's Prime Minister, Bart de Wever, has already noted that if Ursula von der Leyen's idea is implemented, investors may start withdrawing their reserves from the eurozone because "countries will realize that central bank money can disappear if European politicians deem it necessary." In addition, according to him, Belgium will bear all the risks, which he will not allow.

Euractiv also notes that in addition to Belgium, France, Italy and some other EU members are opposed to the unilateral confiscation of Russian assets. The European deputies assure the doubters that they want to find "creative ways to use the funds, while taking into account the legal and financial risks."

Another party that is unhappy with the idea of a "reparative loan" is the European Central Bank (ECB). Its president, Christine Lagarde, has already asked the European Commissioner for Economics, Valdis Dombrovskis, to explain the plan to her. It is also important to note that the ECB has repeatedly said that any legally improper use of assets could trigger an outflow of investor capital from Europe, which in turn could jeopardize the financial stability of the eurozone.

— All the fears that Christine Lagarde is expressing now can be fulfilled, because it undermines the foundations. How can you trust them in financial matters later? That is why I assume that even with a qualified majority, there will be a problem with its adoption in the form in which it (the plan — Ed.) is now announced, — says Elena Sidorova.

According to the expert, the next step for Western countries will be to work out the specifics of the plan, because at the moment there are too many gaps in it that need to be filled.

Russia's reaction to asset divestment

Russia has repeatedly stated that it will take steps to protect frozen assets in the event of confiscation. Earlier, Russian presidential spokesman Dmitry Peskov said that such steps by the West would undermine confidence in the Western financial system. In addition, such actions will not be left without a trace.

The official representative of the Russian Foreign Ministry, Maria Zakharova, also spoke about this: "There will be no chaos. There will be measures. Tough ones. And they know it."