The use of funds frozen from Russia for the benefit of Ukraine is an increasingly hot topic in Europe. In total, this is a pot of around 330 billion euros. Of that, slightly less than 190 billion euros have been deposited in the zero-interest escrow account of the European Central Bank ECB, which is managed by the Belgian Euroclear.
It is Euroclear that opposes touching the frozen funds and its CEO Valérie Urbainin according to the reason is clear.
“The most important thing for Euroclear is credibility and trust. We are an essential link that must remain infallible for the stability of financial markets. Anything that even remotely resembles confiscation would be illegal. We must be very vigilant. It would be against international law regarding sovereign property belonging to the state. Russia could then take legal action,” he explains. In an interview with Le Monde.
If EU leaders finally decide to use the frozen funds, Urbain says Euroclear is even ready to take legal action.
The CEO of Euroclear says that he has discussed the matter with the President of the European Central Bank, the ECB Christine Lagarden with. The central bank has repeatedly warned about the effects of the use of funds frozen from Russia on the stability of the common currency, the euro.
“I would argue that the basis of international law, on the basis of which all decisions are made, is important for investors, and I’m sure that’s a factor that decision-makers take into account,” Lagarde answered a question on the matter in March.
Valérie Urbain states in an interview with Le Monde that the best way to solve the problems related to the frozen funds is peace in Ukraine.
He points out that the freezing of Russian funds is based on Western sanctions against Russia, which the EU must renew every six months. Urbain asks what will happen if Hungary and Slovakia, who oppose the sanctions, get their way next time, and the sanctions are not extended.
“If the sanctions are lifted, Russia can knock on our door at any time and demand compensation. Who will then give us 140 billion euros to pay back? This scenario cannot be ruled out.”
With 140 billion euros, the CEO of Euroclear refers to the amount that the EU would lend to Ukraine. According to the European Commission’s plan, the funds in Euroclear’s accounts would be exchanged for a zero-interest bond issued by the Commission, and Ukraine would be given a zero-interest loan. According to the plan, Ukraine would repay the loan only after Russia has ended the war and paid the war reparations.
Urbain reminds that frozen funds are also kept in Japan, Great Britain, Switzerland and the United States. Japan has categorically excluded the use of funds from the options.