EU member states must consider seizing Russia’s frozen foreign exchange reserves to help pay for Ukraine’s post-war reconstruction. This was stated by EU High Representative for Foreign Affairs and Security Policy Joseph Borrell in an interview with the Financial Times.
His statement comes amid a dilemma with the West over how to force Moscow to pay for some of the damage caused by the conflict.
Borrell said the United States had taken control of billions of dollars in assets belonging to the central bank of afghanistan, in part to compensate the victims of terrorism, as well as to provide humanitarian assistance to the country. According to him, it would be logical to consider similar steps with the Russian reserves.
We have the money in our pockets and someone has to explain to me why this can be done with Afghan money, but not with Russian money.he noted.
Russia is challenging in court the freezing of its international reserves
It was unprecedented that the gold and foreign exchange reserves of such a large country were blocked
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At the start of the war, the EU and its allies froze hundreds of billions of dollars in foreign exchange reserves in Russia’s central bank accounts.
In March, Russia announced that sanctions against the central bank had resulted blocked about $ 300 billion of its gold and foreign exchange reservestotaling more than $ 600 billion.
EU officials have questioned whether Russia’s reserves can in any way be used in Ukraine’s reconstruction efforts, but Brussels has not come up with any political proposals on the subject.
Borel raised the idea as one of the many ways in which R.Usia can be made to help cover the damage.
Asked last month whether the money could be seized and used to rebuild Ukraine, US Treasury Secretary Janet Yellen said this is not something that should be done lightly, but only in coordination with the allies.
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Russia will pay off Eurobonds in rubles while its reserves are blocked
The United States on Monday prevented Russia from paying more than $ 600 million to sovereign debt holders
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Borrell stressed that the topic of how to pay for the reconstruction of Ukraine is one of the key political issues, given “the incredible amount of money “that will be needed. He called for a discussion on Russia’s methods of securing “military compensation”.
According to the European Commission the cost of rebuilding the war-torn country could reach hundreds of billions of euros, with Europe expected to bear a significant share of this burden.
US President Joe Biden has proposed that the confiscated assets of the oligarchs be sold to help rebuild Ukraine, an idea that was also advocated last week by European Council President Charles Michel.
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Moody’s: Russia may already be in de facto default
Russia has tried to pay the dollar debt in rubles
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The idea of confiscating Russia’s foreign exchange reserves would be a dramatic move, which is likely to worry other governments that have strained relations with the EU and its partners.
However, Borrell claims that this will not be an unprecedented step, recalling the US decision to allocate $ 3.5 billion of the frozen assets of the Afghan Central Bank for needs, including humanitarian aid and compensation for the families of the victims of the 9/11 attacks.
“This is one of the most important political issues at the table – who will pay for the reconstruction of Ukraine?”he said.
