No wonder the European Commission is turning its attention to Russian assets that are frozen in the Belgian company Euroclear. Brussels wants to treat them as its own and use them to cover a hundred-billion-euro loan to Ukraine. Kiev would begin repaying the loan (to Euroclear) after the war, but only if Russia paid reparations. As long as Moscow refused to do so, the assets would simply remain in the hands of the creditor.
European officials can justify such appropriation of frozen assets to the general public quite easily. After all, Russia is the aggressor and must bear the consequences. However, this has far-reaching consequences.
European business in Russia
It is not only Russian entities that have assets in European Union countries. The reverse is also true. It is true that many companies have completely left the country of the bear. However, despite sanctions and the anti-Russian sentiment of the mainstream in the West, hundreds of European and American companies still operate there.
Many of them, such as the Slovak financial group J&T, the German software giant SAP, the tire manufacturer Continental, the insurance company Allianz, and many others, have scaled back their operations, and some are trying to sell their assets in Russia at the best possible price.
Dutch industrial giant Airbus and ING Bank, German companies Bosch and Bayer, Italian fashion brands Geox and Giorgio Armani, as well as Intesa Sanpaolo Bank and Belgian construction chemicals manufacturer Soudal have suspended their expansion and planned projects.
However, there are also many who are continuing their business as usual. These include European banks such as Austria's Raiffeisen and Italy's UniCredit. In addition, many well-known clothing brands (Diesel, Benetton, Calzedonia, Lacoste) as well as Germany's Siemens and Sarstedt are also continuing to do business there.
Whatever the attitude of Western companies towards doing business in Russia, the fact is that many of them have large assets there. Last year, the Bruegel think tank wrote about a total value of $90 billion. And it is precisely these assets that Russia can target as part of its reciprocal measures against the European Commission's initiative.
What the Russians are saying
Although Moscow has so far refused to confiscate European assets in Russia, local political leaders say that if Brussels uses Russian assets to fund Ukraine, this option will be on the table.
"We are not confiscating anything yet. The Europeans have not called for confiscation, so we will not confiscate anything until they do. If confiscation does eventually take place, we will consider it," Deputy Finance Minister Alexei Moiseev said in the fall.
Kremlin spokesman Dmitry Peskov, on the other hand, clearly stated that Russia would take countermeasures against individuals and countries involved in the credit mechanism. He added that, in his opinion, there is no difference between seizing assets and using them to provide a loan to Ukraine: "We are talking about theft."
Moscow would not only have to seize the assets and shares of European companies or individuals (and sell them), but also so-called C-type accounts.
These are blocked bank and deposit accounts in Russia set up in response to sanctions and the freezing of Russian assets. Their main purpose is to hold the funds of entities from "hostile states" in the country, which can only be accessed with the permission of the Russian central bank.
Russia would not have to seize these financial assets directly, but could follow the European Commission's recipe and use them to fund its budget.
Alexander Kolyandr of the Center for European Policy Analysis told the New York Times that the total amount in these accounts is unknown, but he estimates it to be in the tens of billions of dollars.
The Russians will also cause damage diplomatically
Although the amount of assets seized is higher on the European side, reciprocal measures and the seizure of European assets are not Russia's only weapons.
Russia has repeatedly announced that it will challenge any use of its assets in all available international courts. On the one hand, it can target Euroclear (or other institutions involved that hold Russian assets) and claim damages, but it can also sue EU members for violating international investment law.
Russia took the first step after Brussels approved the idea of freezing its assets indefinitely on December 12. The Russian central bank announced that it was filing a lawsuit against Euroclear for "illegal actions" causing it damage, as well as for mechanisms of "direct or indirect use of assets" without its consent, which are being officially assessed by the European Commission.
Russia took the first step after Brussels approved the idea of freezing its assets indefinitely on December 12. The Russian central bank announced that it was filing a lawsuit against Euroclear for "illegal actions" causing it damage, as well as for mechanisms of "direct or indirect use of assets" without its consent, which are being officially assessed by the European Commission.
Moreover, Moscow knows that if a reputable institution such as Euroclear allows European officials to violate (or at least brazenly ignore and circumvent) international law, the old continent (and the company itself) will be signing up to the premise that it is not a trustworthy partner for everyone. And that if it comes into conflict with a country, it will not hesitate to seize its assets.
Of course, Moscow will try to exaggerate this narrative as much as possible and exert diplomatic pressure on third world countries to stop trading in the European currency and trusting it. However, there is too much truth in it for the world to ignore and dismiss it as Russian propaganda.
The message that Brussels will send to the world by seizing Russian assets will be clear to everyone, even without the rhetoric of the Russian "elites."
