By Dmitry Zhdannikov
DAVOS, Switzerland (Reuters) – Belgium does not oppose the confiscation of 280 billion euros worth of frozen Russian central bank assets, but there needs to be a clear mechanism such as using the assets as collateral for Ukraine, Prime Minister Alexander De Croo told Reuters.
After President Vladimir Putin sent troops into Ukraine in 2022, the United States and its allies prohibited transactions with Russia’s central bank and finance ministry, blocking around $300 billion of sovereign Russian assets in the West.
G7 countries are discussing possibly confiscating the frozen Russian assets, though some G7 members have concerns about the precedent, mechanism and potential impact of taking such a step against central bank assets.
De Croo told Reuters in Davos that Belgium was ready for a discussion about what to do with the interest on the frozen Russian assets and the actual assets themselves.
“We don’t say no to asset confiscation. But we need to work on a mechanism. For example, they can be used as collateral for raising funds for Ukraine,” he said.
“We are open to further discussion and are willing to participate in a solution of finding a legal basis for those transfers to Ukraine, without destabilising the global financial system,” he said.
De Croo said the risk was that financial stability could be undermined as central banks often deposit assets with each other.
The lion’s share of the assets – essentially securities in which the Russian Central Bank had invested – are frozen in Euroclear, a depository based in Brussels.
Some securities mature and hence are being converted into cash – a transaction that is taxed at 25%, he said.
“If there is any taxable revenue, we will isolate it so it can go to Ukraine,” De Croo told Reuters in Davos. He said tax on the frozen assets totalled about 1.3 billion euros in 2023 and in 2024 would total about 1.7 billion euros.
U.S. Treasury Secretary Janet Yellen last year had expressed concerns about significant legal obstacles to confiscating frozen Russian assets, but more recently has embraced exploring the idea in a tighter funding environment.
(Additional reporting by Guy Faulconbridge in Moscow; Editing by Alex Richardson)
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