USA kicks off legal process to deliver $280 billion of frozen Russian assets to Ukraine

The Russian assets that were blocked after President Putin decided to start the special military operation in Ukraine, can be transferred to Kyiv. The Foreign Affairs Committee of the US House of Representatives supported the corresponding bill. If the bill is adopted, the funds will be transferred to the special "Ukraine support fund.” Kyiv will be able to use those funds for social and restoration purposes.

According to most recent reports, Western countries — the United States, the European Union and their allies — froze Russian sovereign assets worth $280 billion. According to the Russian Finance Ministry, 3.5 million Russians have a total of about 1.5 trillion rubles (over $16 billion) frozen in foreign banks.

In March 2022, the Russian authorities spoke of $300 billion. It was almost half of Russia's gold and foreign exchange reserves. In June last year, the US Treasury evaluated the blocked Russia's assets at $330 billion, of which $300 billion are assets of the Central Bank. Most of the funds were blocked in the European Union: as of July 2023, the amount was 207 billion euros (almost $222 billion), including assets of the Russian Central Bank.

Russia's gold and foreign exchange reserves decreased from February 1, 2022 to March 1, 2023 by 8.9 percent to $574.2 billion.

In July 2022, the Central Bank of the Russian Federation decided to stop disclosing data on the volume of international reserves. Eight months later, the bank resumed publishing such information.

Currently, Western countries are reinvesting the frozen funds. In particular, the European Union plans to earn three billion euros a year from them. However, reinvesting Russia's blocked assets in Ukraine's favour may undermine confidence in the dollar, the European Central Bank said.

The current bill approved in the United States empowers the Secretary of State to provide additional assistance to Ukraine using assets confiscated from the Bank of Russia or other foreign assets of the country. The Kremlin is confident that the confiscation of the assets will become illegal, and Russia will challenge such a decision legally.

The European Union supports the initiative, although several members of the bloc have repeatedly emphasised that seizing the Russian assets required a legal basis that did not exist in the EU. Confiscating Russia's assets will become legal should the EU elaborate an appropriate law.

A number of European countries, including France, Germany and Belgium, fear that the transfer of Russian assets to Ukraine will distort financial markets and weaken the position of the euro as a reserve currency. Belgium and Luxembourg require guarantees that they will not incur either legal or financial risks.

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Author`s name Pavel Morozov
Editor Dmitry Sudakov