It’s a plan that U.S. President Joe Biden’s administration is backing heavily but so far Europe’s most powerful governments in Paris, Berlin and Rome are unconvinced. Washington policymakers are piling pressure on their allies to ditch their hang-ups over what would be an unprecedented step fraught with legal, ethical and political difficulties.
“It’s never been done before to seize a country’s reserves,” said Charles Lichfield, an analyst with the Atlantic Council and a leading expert on Russian frozen assets. “But crossing the threshold, the irreversible threshold, where you take them away and give them to Ukraine, while morally it may seem right … the Europeans are not yet comfortable with doing it without a more sound legal basis, which has not yet been found.”
Washington’s determination has alarmed European governments that worry such a move would spook investors in the euro. Others fear Moscow could retaliate by targeting European assets in Russia and launching cyberattacks against Western countries. Some say that however heinous Moscow’s behavior, a country shouldn’t be forced into reparations while war still rages.
The problem for the U.S. is that the vast majority of the assets are kept in Belgium, in the security depository Euroclear ― America holds only negligible amounts ― so any confiscation move would need European approval. The hope is that the G7 group of leading industrialized nations will come up with a common position later this year.
EU doesn’t plan full-scale confiscation
A senior Biden administration official, having been granted anonymity to discuss the sensitive issue, confirmed to POLITICO there are tensions between the U.S. and some of its European allies over the matter.
The European Commission, the EU’s executive arm, is not ready to go beyond an existing plan that only targets the revenues generated by the frozen funds, rather than a wholesale confiscation of the assets.