EU should confiscate Russia’s foreign exchange reserves and use them to rebuild Ukraine, top diplomat claims

EU foreign policy chief Josep Borrell arrives for a meeting of EU foreign ministers at the European Council building in Luxembourg, Monday, April 11, 2022. (AP Photo/Olivier Matthys)
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EU countries should consider seizing Russia’s foreign exchange reserves to use to rebuild Ukraine, the bloc’s top diplomat Josep Borrell revealed in an interview with the Financial Times on Monday.

The West is debating how to force Moscow to pay for part of the damage caused by the invasion of Ukraine, and Borrell likened the proposal to that of the United States seizing several billion dollars in assets from the Afghan central bank, partly to compensate the victims of terrorism and humanitarian aid to the country. In Borrell’s view, it is logical to treat Russian similarly.

“I’d definitely be in favor. It makes sense,” Borrell said. “We have the money in our pockets, and someone has to explain to me why we can do it with Afghan money but not with Russian money,” he added.

The EU and its allies have already frozen hundreds of billions of dollars in foreign exchange reserves on Russian central bank accounts — the total value of frozen assets in the form of foreign exchange and gold reserves exceeds €550 billion.

EU officials are discussing whether they could use Russian reserves to rebuild Ukraine, although Brussels has not yet submitted any political proposal in this regard. In March, U.S. Treasury Secretary Janet Yellen warned not to take such action lightly.

Europe will bear the brunt of Ukraine’s rebuild

According to the EU, the reconstruction of Ukraine will require hundreds of billions of euros, and all European nations are likely to bear some of that financial responsibility. U.S. President Joe Biden has proposed selling the confiscated assets of Russian oligarchs to help Ukraine, an idea also supported by European Council President Charles Michel last week.

The European Commission is dealing with the legal side of things, which is not easy due to the need to respect due process and the legal rights of individuals. Confiscation of property is sometimes possible after a criminal conviction, however, situations where sanctions have been imposed on someone do not meet such a requirement.

The plan to seize Russia’s foreign exchange reserves would be a dramatic move and would likely worry governments that have strained relations with the EU and its partners.

“Who pays for the reconstruction of Ukraine is one of the most important political issues,” Borrell stated.

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