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IMF weighs possibility of confiscating Russian assets

Any decisions on the funds should be backed with “sufficient legal support” to avert future risks, according to a spokesperson

Any steps towards seizing Russia’s frozen reserves should be backed by “sufficient legal support,” IMF spokesperson Julie Kozack said at a regular briefing on Thursday.

The EU and other G7 nations have blocked an estimated $300 billion in assets belonging to the Russian central bank since the start of the Ukraine conflict in 2022. Of that amount, €196.6 billion ($211 billion) is being held by the Belgium-based clearinghouse Euroclear, which last year accumulated nearly €4.4 billion in interest on the funds.

“Decisions related to the seizing of assets are for the relevant country authorities and jurisdictions to decide,” Kozack told reporters, reiterating the IMF’s previous statements on the matter.

“What is important for the IMF is that any action has sufficient legal underpinnings and does not undermine the functioning of the international monetary system,” the spokeswoman stressed.

The IMF has previously cautioned that Western plans to seize frozen Russian assets could pose a threat to the global monetary system and entail unforeseen risks.

Some Western officials have been pushing for the outright seizure of the Russian funds and transferring them to Ukraine, or at least using the interest generated by the assets.

While Kiev’s Western backers generally agree that the frozen assets should be used to aid Ukraine, they are at odds about whether an outright seizure would be legal. The US and UK support the direct expropriation of the funds, but some EU member states, France and Germany in particular, warn the move would erode trust in the European financial system.

The EU’s foreign policy chief, Josep Borrell, proposed last month using the profits generated by Russia’s frozen central bank reserves to support Ukraine militarily.

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The bloc would reportedly use 90% of the revenues to procure arms for Ukraine, while the remaining 10% would be transferred to the EU budget to be used to support Kiev’s defense industry.

Moscow reacted to the diplomat’s proposal by warning that such a move would lead to disastrous consequences. Kremlin spokesman Dmitry Peskov said that Borrell’s plan is “another statement in the spirit of moving towards the destruction of the legal foundations of European and international law” and cautioned that such a seizure would cast serious doubt on the EU’s commitment to the principle of asset immunity.

The spokesman also warned that all EU nations and officials that back Borrell’s plan would be subject to “legal prosecution for many decades to come.” 

Russia has repeatedly said that any actions taken against its assets would amount to “theft,” stressing that seizing the funds or any similar move would violate international law and undermine Western currencies, the global financial system, and the world economy.

April 05, 2024 at 12:38AM

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