A historic EU decision this week to send interest earned on hundreds of billions of dollars in Russian central bank accounts on its territory to Ukraine is adding urgency to a debate over what will happen to those accounts.
The difference between the two sums is enormous.
Ukraine wants to use the estimated 210 billion euros ($228 billion) of Russian central bank money held in European institutions to defeat Russia on the battlefield. The EU froze these assets in February 2022, immediately after Russia invaded Ukraine. Another 50 billion euros ($54 billion) are frozen around the world.
“If the world has 300 billion dollars, why not use it?” Ukrainian President Volodymyr Zelenskyy recently said.
After years of debate, the bloc decided on Tuesday to allow Ukraine to use only the interest earned by those accounts, which the EU believes would amount to around 2.5 to 3 billion euros (2.7 billion from dollars to 3.3 billion dollars) per year.
“This decision was the result of a lot of discussion and soul-searching,” an EU diplomatic source familiar with Ukrainian affairs told Al Jazeera on condition of anonymity.
International legal experts agree that it is a big step.
“There is no precedent for asset freezing on this scale and so the question of what to do with interest has never been more acute,” Anton Moiseienko, professor of international law at the Australian National University, told Al Jazeera. “In this sense, new paths are being opened.”
The EU’s decision is to take the interest twice a year and send it to Ukraine in the form of money and weapons.
This money goes beyond the weapons that EU members have already contributed, or plan to contribute through bilateral agreements, European Commission sources told Al Jazeera.
It is also separate from the 12.5 billion euros ($13.6 billion) per year in financial assistance they have promised for the next four years.
A first payment is due in July, representing interest earned since February, when the EU ordered financial institutions to separate profits from principal.
The institutions will keep any interest earned between February 2022 and February 2024, possibly for reconstruction purposes, European Commission sources said.
And what about the rest?
“At this point, it does not appear that the EU is in any way prepared to move towards a discussion on the use of the principal for Ukraine,” the diplomatic source said. “There are European institutions that are against it and many Member States that are against it. The EU does not want to risk its reputation and prosperity.”
The European Central Bank has been especially vocal about leaving other central banks’ assets alone, worried about the damage to the euro’s reputation. And some EU members, such as Hungary and Slovakia, maintain strong economic ties with Russia and have expressed their discomfort over Moscow’s alienation.
This leaves things stagnant, Moiseienko said.
“It’s a reserved space, an intermediate step. But a space reserved for what? Moiseienko said. “Transfer these assets to Ukraine or continue this wait-and-see game? In terms of the general direction of travel, it’s not very clear.”
“The EU continues to say that Russia must pay, but continues to take measures that prevent this from happening,” he added.
The EU could be testing international reactions to its first move.
Philippa Webb, professor of international law at King’s College London, said Russia had a clear obligation under the law to pay reparations to Ukraine for waging an aggressive war against it, but it also enjoyed immunity from most forms of law enforcement.
But this immunity was not absolute, she informed the European Parliament in an investigative article last February. It’s just a matter of finding the right legal route to confiscate all the capital – something that would open up new legal avenues.
Over the past two years, several ideas have been put forward.
One approach would be to provide a loan using Russian assets as collateral, but it would be much lower than the assets.
Another is to use a legal concept known as countermeasures, under which a country takes a measure normally considered illegal, such as the seizure of sovereign assets, but is justified in response to a previous illegal action by another state.
In this case, Russia’s illegal act was to wage a war of aggression, against the statutes of the United Nations Charter and its recognition of Ukraine’s borders in 1991.
More ambitiously, the United Nations could vote to lift Russia’s immunity from law enforcement, creating a new international legal norm. That would require a large majority in the General Assembly, legal experts believe.
Shortly after Russia’s invasion of Ukraine, 141 of the 193 members of the UNGA demanded Russia’s withdrawal, marking a high point of empathy for Ukraine.
As Al Jazeera reported, Ukraine was unable to recreate that majority to indict Russian President Vladimir Putin for the crime of aggression, and the world is unlikely to show greater willingness to rework international law to confiscate Russian assets.
The EU has invited Ukraine to become a future member and therefore bears the greatest responsibility for its reconstruction, political scientist Theodoros Tsikas pointed out.
An unwillingness or inability to seize an aggressor’s assets would not just be considered a weakness – it would not live up to the EU’s claim to uphold the rule of law, he said.
“Reconstructing Ukraine and healing its wounds is seen as a fundamental task for the EU,” he told Al Jazeera. “Like all aggressors, Russia will have to pay war reparations to Ukraine,” Tsikas said.
How this happens without global enthusiasm is now the subject of increasingly intense debate.
This story originally appeared on Aljazeera.com read the full story
