LInternational law is like money, it is based on trust. No one wants to dive into the jungle of lawlessness. Even in times of war. This is the question that was on the minds of the ambassadors of the 27 countries to the European Union, during the negotiations on Wednesday, May 8.
If they opened negotiations on the reduction of LNG gas imports from Russia, they above all agreed on the use of Russian money blocked in Europe. A very delicate subject on which they arbitrated with as much caution as possible. They decided that Europe could use the financial interest generated by Russian assets, frozen on its territory since the invasion of Ukraine, to help the country defend itself by providing it with weapons and equipment. Interest, but not capital, major difference.
Of the approximately 260 billion euros of Russian assets immobilized abroad, nearly 190 billion are housed in the Belgian financial company Euroclear. This is a clearing house for international transactions in Europe. As such, it collects and remits money to central banks around the world. As it no longer pays anything to the Russians, the frozen assets produce interest. From February 2024, this interest, estimated at around 3 billion euros per year, will be used 90% to buy weapons for Ukraine and 10% for reconstruction.
Confiscation
The United States is pushing for complete asset confiscation. They also passed a law to this effect in April, as part of the aid package for Ukraine. The Europeans did not want to take this step, which would amount to relying on international law, particularly in monetary matters. Central banks, accustomed to constantly exchanging currencies, are in any case firmly convinced of this. Such confiscation would be a rupture in the international order, at a time when Europe would like Russia to respect it, said Christine Lagarde, the president of the European Central Bank.
More concretely, these institutions fear the loss of confidence of third countries. This is the message that Indonesia and Saudi Arabia recently sent to the G20. Europeans also fear retaliatory measures on the hundreds of billions of euros of their companies’ assets frozen in Russia. The Americans own few Russian assets and have no fear of the dollar as a reserve currency. International law, which they largely inspired, is also the result of a balance of power.