Divisions flare among finance ministers over the seizure of Russian assets
The division among the world’s top economic officials over how to use Russia’s central bank assets to support Ukraine spilled into public view on Wednesday when Bruno LeMaire, France’s finance minister, said it would taking the frozen assets would be a violation of international law.
The comments, made on the sidelines of the Group of 20 finance ministers’ meeting in Brazil, came a day after Treasury Secretary Janet L. Yellen said seizure of the assets was possible and suggested there was a legal justification for laundry. So.
Officials from Group 7 advanced economies have been debating for months whether they can legally seize more than $300 billion in Russian central bank assets stored in Western countries and use those funds to help Ukraine. These discussions have taken on greater urgency as political support in the United States and Europe declines to continue providing economic and military support to Ukraine.
Ms. Yellen, who initially had reservations about the feasibility of freezing or seizing Russian assets, offered her most explicit public support yet on Tuesday for the idea of unlocking “the value” of Russia’s immobilized assets.
“While we must act together and in a measured manner, I believe there are strong international legal, economic and moral arguments for moving forward,” Ms. Yellen said.
But Mr. LeMaire, speaking just a few hours before a private meeting with Ms. Yellen, walked back that claim.
“We do not have the legal basis to seize Russia’s assets and we must never act without obeying international law and the rule of law,” Mr Le Maire said, according to a recording of his remarks. .
Western officials have been considering several options on how to use the Russian central bank’s roughly $300 billion in assets, most of which are held in the European Union, to provide economic and military support to Ukraine. This includes the European Commission’s proposal to use the interest earned on these assets, use funds as collateral to borrow money for Ukraine or give Ukraine the money directly.
There are signs of growing momentum among Western policymakers to use Russian assets as the military situation in Ukraine becomes more dire. Rishi Sunak, the British Prime Minister, this week urged his colleagues to be more aggressive in their efforts to find a legal way to seize Russian assets. However, France and Germany are pushing for a more cautious approach and Russia has vowed to retaliate if its assets are seized.
In a speech to the European Parliament On Wednesday, European Commission President Ursula von der Leyen expressed support for using profits from these assets to help the Ukrainian military.
“It is time to start a conversation about using the windfall profits from frozen Russian assets to jointly purchase military equipment for Ukraine,” she said. “Ultimately, it is about Europe taking responsibility for its own security.”
Some legal scholars have argued that countries that own Russian assets have the right to cancel their obligations to Russia and apply those assets to what Russia owes for its violation of international law under the so-called international law of state countermeasures.
Ms. Yellen expressed support for the concept of countermeasures during her press conference on Tuesday.
“There is a theory of countermeasures that I think has a strong justification in international law,” Ms. Yellen said, noting that Western countries still needed to pass legislation to ensure that the seizure of Russian assets was consistent with their domestic laws.
The finance minister declined to endorse any approach, saying allies must act together.
Mr. LeMaire said Wednesday that the countermeasures theory was insufficient.
“We really need to understand that making such an important decision, namely profiting from state assets, needs a very strong legal basis,” he said.
He further argued that an attempt to seize Russian assets would need the support of the G20, a threshold that is unrealistic because Russia is a member of that group.
“We should not create any kind of division among the G20 countries,” Mr LeMaire said. “You will create more division at a time when we need more unity to support Ukraine.”
Eshe Nelson contributed reporting from London and Monika Pronczuk from Brussels.