According to the Financial Times, Belgium has proposed a plan to G7 nations to unlock Russia’s frozen assets in Europe and redirect them for Ukraine’s benefit. The Belgian government is proposing issuing debt obligations that would raise funds for Ukraine’s reconstruction. Russian assets would be used to service the debt.
After Russia’s full-scale invasion of Ukraine, the West froze about $300 billion in Russian state assets. However, it has not yet decided what to do with them.
The Belgian government is proposing issuing debt obligations that would raise funds for Ukraine’s reconstruction. Russian assets would be used to service the debt. The FT explains that Ukraine’s allies would demand Russia repay the debt under the issued obligations, and if Moscow refuses, partners would seize Russia’s frozen assets.
“One of the things that this would do is put off the question of what happens to the Russian sovereign assets, even though they would be used as collateral,” one FT source said.
According to the publication, talks are underway between the US and EU regarding Russia’s frozen assets. And Belgium’s proposal was an attempt to find a compromise between differing views both within the EU and G7.
Some nations have hesitated on outright seizure of Russia’s frozen assets, citing legal and economic risks. The US, Germany, France and ECB have warned mass confiscation could undermine financial stability.
However, pressure is building to direct some frozen funds toward Ukraine’s reconstruction. Earlier this month, the Biden administration backed legislation to transfer certain seized Russian assets as Ukrainian aid.
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