Frozen Russian reserves could be used to rebuild Ukraine – EU’s Borrell

by | May 9, 2022

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Russia’s foreign exchange reserves could be seized to help with the cost of rebuilding Ukraine, the European Union foreign policy chief has argued in an interview.
The EU, along with its western allies, imposed sanctions on the Russian central bank’s international reserves in response to the invasion of Ukraine. In March, Russia said that central bank sanctions had frozen around $300bn of assets, around half of its total gold and foreign exchange reserves.

Josep Borrell, the EU’s high representative for foreign policy, told the Financial Times there were parallels with Afghanistan, where the US froze the assets of the country’s central bank after the Taliban took over.

The US has set aside $3.5bn from the frozen assets to compensate victims of terrorism and for humanitarian aid, and Borrell told the newspaper it would be logical to consider similar steps with Russia’s reserves.

“I would be very much in favour because it is full of logic,” he said. “We have the money in our pockets, and someone has to explain to me why it is good for the Afghan money and not good for the Russian money.”

Janet Yellen, US Treasury secretary, has previously said that using the assets for the Ukrainian reconstruction effort could require legislation in the US, however, and should not be done lightly.

But Borrell said it was one of a number of ways in which Russia could be made to contribute. A discussion was needed about methods of ensuring “war compensations” came from Russia, he added.

Joe Biden, the US president, and Charles Michel, European Council president, have both advocated selling off assets seized from sanctioned oligarchs, although doing so could be legally difficult.

The European Commission has estimated that rebuilding Ukraine could eventually cost hundreds of billions of euros, with Europe expected to fund a significant proportion.

Borrell told the FT: “This is one of the most important political questions on the table: who is going to pay for the reconstruction of Ukraine?”

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