The European Union and G7 are discussing a plan to use frozen assets of the Central Bank of Russia to support the recovery of Ukraine, amounting to $250 billion, according to sources reported by Bloomberg.
“Under the proposal, Ukraine’s allies could sell debt to contribute to the war-torn country’s rebuilding, using the frozen assets as collateral. Proponents believe that any settlement to the conflict under international law would find Russia liable to pay for the damage it has caused its neighbor. Should Russia refuse, claims could be made on the frozen assets, the people said,” the publication writes.
At present, discussions on the initiative are at a technical level, and no decision has been made yet. “One of the people said some countries want to move faster than others,” Bloomberg adds.
Until now, several countries, including France and Germany, have opposed directly confiscating frozen assets due to legal issues and potential consequences for the stability of the euro. Meanwhile, the G7 has pledged to compel Russia to pay for the reconstruction of Ukraine and keep the assets frozen until then.
The proposed initiative may involve creating a special company to issue zero-coupon bonds secured by collateral with the option of redemption, according to a source. It will also establish a collateral hierarchy using the assets and banks.
“The option to use the assets as collateral in the meantime … is seen as an alternative to that route, said the people. Russia has vowed to legally challenge any attempt to seize assets,” the publication writes.
On January 31, the Committee on Political Affairs and Democracy of the Parliamentary Assembly of the Council of Europe (PACE) adopted a draft resolution on confiscating frozen Russian assets and their transfer for the reconstruction of Ukraine, as reported by PACE.