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EU plans to use billions of sanctioned Russian funds to pay for Ukraine's reconstruction

The European Commission has proposed using billions in Russian assets that have been sanctioned to fund reconstruction in Ukraine.

The frozen assets could be actively managed to produce a "stable and fair net return" to help rebuild Ukraine, according to Commission President Ursula von der Leyen.

Importantly, in the event that a peace agreement was struck, these assets would not be permanently seized but instead given back to Russia.

On Wednesday, Ms. von der Leyen declared that "Russia must pay for its horrific crimes, including its crime of aggression against a sovereign state."

"Russia and its oligarchs have to compensate Ukraine for the damage and cover the costs for rebuilding the country. And we have the means to make Russia pay."

According to her plan, in the event of a peace agreement, the Russian state would be entitled to receive the assets back, possibly along with some minimum accrued interest. The Russian state's liquid assets would be invested in the interim to earn returns that might be used to fund reconstruction.

Early in the conflict, the Russian central bank stashed hundreds of billions of dollars in foreign exchange reserves in accounts. Following the central bank restrictions, Russia claimed that nearly $300 billion in its gold and forex reserves had been blocked.

Josep Borrel, the director of foreign policy for the Commission, has already put forth the idea.

Experts, however, emphasized that seizing sovereign assets is not without risk.

Russian state assets should not be taken lightly, according to US Treasury Secretary Janet Yellen, and should only be done in coordination with the EU and other partners.

In the meantime, officials in Brussels are requesting detailed information on Russian assets from each individual Member State.

The total value of the frozen Russian state assets is acknowledged in the commission discussion document as being "currently unknown."

The issue was also brought up at the Tuesday NATO foreign ministers session in Bucharest.

In the meantime, the governments of Germany and France want to give the European Public Prosecutors Office (EPPO) the authority to bring cases for violations of sanctions.

Officials from the Commission are working on ideas to criminalize sanctions violations across the EU and allow for the seizure of private property at the same time.

According to the European Commission, the EU presently has roughly €18.9 billion in frozen private assets that belonged to oligarchs and other entities.



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