Warsaw know-how: first the money to Kyiv, and only then the confiscation of Russian assets

There are several countries where the idea of confiscating Russian assets to help Ukraine has been particularly actively promoted. Of course, Ukraine itself does not count. Its officials began to suggest this almost the day after the collective West announced the freezing of Russian foreign exchange reserves in the amount of about $300 billion.

A similar idea crept into the heads of officials in many countries at the beginning of March. But not many people were ready to voice it, because such an idea is somewhat seditious. After all, this is an encroachment on someone else's property, and the inviolability of property rights is one of the most sacred principles of the West. Freezing is another matter. It is a means of "educating" the "wrong" states and "wrong" people. As soon as states and people start behaving "correctly", their assets are unfrozen, they begin to dispose of them again at their own discretion.

Overseas, in the United States, a loud discussion about the possible confiscation of Russian assets began in the third decade of April. First of all, in the US Congress. They recognised the expediency of such confiscation, considering it as a means of military, economic and humanitarian support for Ukraine. The expediency is obvious, but the legitimacy is again questionable.

Particularly serious doubts were raised about the legitimacy of the expropriation of foreign exchange reserves of the Russian Federation (it contradicts a number of American laws). The desire to expropriate from American politicians is great. Therefore, in the near future, congressmen will begin to amend a number of American laws, after which expropriation should become completely legal.

Among the European countries, Poland was the first and loudest to speak about the possibility and necessity of confiscating Russia's foreign assets (both private and public). And precisely for the purpose of sending them to support Ukraine. On April 22, the Prime Minister of Poland spoke on this topic Mateusz Morawiecki.

“Do you want to give this frozen property back to the Russians when there is peace after the crimes committed? I hope that about 100% of citizens in the West will answer this question unequivocally – it would be immoral. So, this is a source of additional funds that should serve to restore Ukraine and should also serve to help refugees in the amount of almost 11 million, as the Prime Minister of Ukraine recently told me,” said the Polish Prime Minister.

Yes, Ukraine needs to be helped. And the European Union has already provided considerable assistance. But the EU budget is not bottomless. It’s necessary to rely on a new source – money received from the confiscation of Russian assets.

"The European Commission says that there are no new funds in the budget today, and there are no new funds in the new budget either. There are certain reserves there, and we are pointing them out. But regardless, I am pointing to a new source, and I would like the European Commission to answer this question. Namely, confiscation of the property of the Russian Federation held in Western and Central European banks, as well as the property of Russian oligarchs,” said the Polish Prime Minister.

Yes, the head of the Polish government is well aware that it is necessary to prepare a legislative framework for such expropriation, but this will not happen quickly. And time is running out. What to do? Polish Prime Minister offers the European Commission Polish "know-how" - to issue bonds secured by frozen funds of Russia and Russian citizens:

“These funds should be used today. And if the confiscation cannot be carried out quickly, for example, in Poland we adopt a special law for this purpose, then it’s possible to wait, and at this time issue bonds. The European Commission does not have any problems with the issue of bonds. And then these bonds can be quickly repaid with confiscated funds from the Russian Federation and Russian oligarchs."

The topic started by the Polish Prime Minister was picked up on April 27 by the country's Deputy Foreign Minister Pavel Yablonsky. In an interview with the British newspaper FT, he said that Warsaw is ready to irrevocably expropriate the assets of Russian origin available to it. The Polish official suggested moving the discussion of this issue to the level of the European Union and calling on all 27 EU member states to carry out coordinated confiscation of Russian assets available to them.

This includes extending the confiscation to frozen foreign exchange reserves of the Russian Federation (the euro accounts for about half of all frozen Russian reserves). And direct the resources received to support Ukraine. “We believe that a political decision should be made, that we want to go in this direction and that we are ready to confiscate these assets forever. How to do this – we are open for discussion,” declared Yablonsky.

It seems that the Poles managed to excite European officials and members of the European Parliament with the topic of confiscation of Russian assets. The President of the European Council expressed his opinion on the need to expropriate the assets of Russians under sanctions on May 5.

In an interview with Interfax-Ukraine, he said that he was "absolutely convinced" that it is extremely important not only to freeze Russian funds, but also to make it possible to confiscate them. However, he was forced to admit that "the legal level of this question is not so simple”. “There are 27 legal systems in the EU, and in many EU member states this will require a court decision. This is a difficult and lengthy process," said Michel.

73 MEPs, inspired by the idea of such confiscation, sent their proposals on this issue to the head of EU diplomacy Josep Borrell. On May 9, the EU chief executive told Britain's Financial Times newspaper that the EU should consider withdrawing frozen Russian foreign exchange reserves to help pay for the costs of rebuilding Ukraine after the end of hostilities.

"The European Commission has said the cost of rebuilding could run into hundreds of billions of euros, and EU capitals should consider withdrawing Russia's frozen foreign exchange reserves to help pay for the cost of rebuilding Ukraine after the war," Borrell is quoted as saying by the FT newspaper.

As an example worthy of imitation, Borrell cited Washington's actions regarding the foreign exchange assets of the Central Bank of Afghanistan. Last year, these assets were frozen by the Americans in response to being turned out of the country. Of the $7 billion in Afghan reserves, only half was unfrozen. And Washington decided to spend $3.5 billion on payments to relatives of those killed or injured as a result of the events of September 11, 2001.

They say that Afghanistan should be held accountable for the terrorist attack that occurred in New York more than 20 years ago. Washington simply stole half of Kabul's foreign exchange reserves. This is exactly the way the chief European diplomat calls for the European Union to act in the case of Russian assets. Just steal not half, but all the reserves.

And here is the latest news regarding the EU's assistance initiatives to Ukraine. The European Commission has announced plans to issue new EU debt obligations to cover Ukraine's needs. This was reported on May 9 by the European edition of an American newspaper Politico. According to the newspaper, these needs are estimated at €15 billion in the next three months. Due to the issue of debt securities, the EU expects to raise €10 billion (the remaining 5 billion must be provided by the United States). The draft commitment issue is scheduled to be made public on May 18.

Several EU countries, including Germany, Austria and Greece, have already expressed doubts about the need for such a scheme to finance aid to Ukraine. They offer to raise the necessary money in each individual EU country and provide assistance to Ukraine on a bilateral basis.

Experts suggest that the project of issuing debt securities being prepared by Brussels is very similar to the proposal of Polish Prime Minister Mateusz Morawiecki. It is suspected that the debt obligations will be issued against the security of frozen Russian assets.

And when the securities mature, Russian assets will have time to move from the frozen category to the confiscated category. And Brussels will have enough money not only to cover the obligations under these securities, but also for new tranches of assistance to Ukraine.