UK wants a bigger say on frozen Russian assets

The UK is proposing to transfer nearly €200 billion of frozen Russian state assets managed by the Belgian company Euroclear into a separate investment fund.

According to Politico's sources, the move could be the first step towards their eventual seizure and subsequent transfer to Ukraine - something Britain supports but key EU member states such as Germany and Italy oppose.

The proposal comes as European states and the US seek to reach a 30-day ceasefire with President Vladimir Putin as an entry point to peace talks. Many hope that the introduction of a mechanism for confiscating Russian assets could strengthen the enforceability of any agreements.

France, for example, has previously suggested that the threat of transferring money to Ukraine could be a tool to deter Moscow from violating the ceasefire.

Although Russian government bonds held in Britain are among the frozen assets, London has so far had only limited influence over how they are managed - because they are formally held by Euroclear, a Belgian custodian subject to EU rules. The British government has previously said it has frozen around £25 billion of Russian private and state funds.

The establishment of a "special purpose vehicle", a special purpose fund that would officially recognise British interests, would give the UK greater influence and strengthen Prime Minister Keir Starmer's position as a mediator between Europe and the US.

"Britain could be involved - but on its own terms. It cannot go against Europe's decision," an EU diplomat told Politico.

A spokesman for the British Foreign Office said: "We are working intensively with our partners on all legal options to ensure that Russia pays for the damage it has done to Ukraine."

Countries favourable to Ukraine want to act quickly because they fear that Hungary - which is closer to Russia - will block the extension of sanctions in July. EU sanctions must be renewed unanimously every six months and Budapest has repeatedly threatened to exercise its veto.

The transfer of assets from Euroclear to the new fund could serve as a safeguard against the Hungarian veto, although it is not clear whether such a move would stand up legally.

Belgium, where Euroclear is based, faces legal and financial consequences in the event of a disputed seizure of assets. Foreign Minister Maxime Prévot warned: "Belgium will not be able to act alone. We have to share the risks."

Euroclear sources admit that a potential legal vacuum in the event of non-extension of sanctions could damage the institution's credibility and lead to lawsuits by asset holders.

Another motivation for the creation of the new fund is the opportunity to invest in more profitable and riskier assets. Under Euroclear's rules, the assets are invested with the Belgian central bank at the lowest possible risk-free return.

In 2024, these investments generated a profit of €4 billion, which was earmarked for repaying the €45 billion G7 joint loan to Ukraine. The EU will provide its full €18 billion share by the end of the year, but it is not clear where the additional aid will come from.

Politico/gnews.cz - GH