EU should seize Russia’s currency reserves to fund Ukraine’s reconstruction, says bloc’s top diplomat
The European Union should consider seizing frozen Russian central bank assets to pay for Ukraine’s reconstruction, one of the bloc’s top diplomats has said.
Josep Borrell, Head of EU Foreign Affairs and Security Policy, told the Financial Times that he would be “fully supportive” of such a plan. He cited the example of the US taking possession of Afghanistan’s foreign exchange reserves.
“We have the money in our pockets, and someone needs to explain to me why it’s good for Afghan money and not good for Russian money,” he said. flight in an interview published Monday.
The EU, the United States and their allies froze the big one of Russia’s Central Bank’s foreign currency stockpile in late February as it imposed tough sanctions on Moscow following the invasion of Ukraine.
The move cut Russia about two-thirds of its nearly $630 billion in reserves, according to estimates of OMFIF, a think tank on central banks. The OMFIF said the EU is the largest repository of Russia’s reserves, with France and Germany holding more than 21% between them.
Earlier this year, US President Joe Biden ordered that about half of Afghanistan’s central bank reserves, which were frozen when the Taliban overthrew the government, be made available as possible compensation for 9/11 victims. and to fund humanitarian aid in the country.
Borrell told the FT he wanted to see the EU discuss ways to ensure Russia is held accountable for the vast economic damage its invasion of Ukraine has unleashed.
However, many emerging countries were troubled by Russia’s reserve freeze, which demonstrated the power of the United States and its allies over the global financial system. Tensions could rise further if the EU and US attempt to take control of these assets.
US Treasury Secretary Janet Yellen did not immediately dismiss the prospect when asked about a seizure in April, but said it would be a “very important step”.
“It’s something the consequences of which we should carefully consider before undertaking it. I wouldn’t want to do it lightly,” she told a news conference.