A simple solution that addresses all of these concerns is available.
To avoid the risk of Russia’s central bank assets unfreezing and returning to the hands of the Kremlin in July, Europe needs to use the countermeasures argument and put the assets beyond Moscow’s reach. This can be done by transferring them to a new vehicle set up in Belgium, with EU governance oversight, and placing the assets’ legal title in a trust for Ukraine’s benefit. Importantly, the assets wouldn’t be transferred to Ukraine but would be used to generate a steady stream of annuity income to support its defense procurement and ongoing funding needs.
As it stands, Ukraine doesn’t have the capacity to absorb such a vast sum of money in one go, but it needs reliable and sustainable income. This means the reversibility requirement of the countermeasures argument would be met, as the potential for asset ownership to return to Russia would remain. And, as an aside, if the vehicle were based in Brussels, Belgium’s tax revenue would be protected too.
The vast majority of the Russian central bank assets that existed in February 2022 were bonds that have since matured and amount to an enormous pile of cash earning very low interest. Once transferred into the new vehicle, these assets could be actively managed, earn a significantly higher income and provide an annuity of cash flow to support Ukraine, reducing the need for Western allies to dig into dwindling taxpayer funds in order to keep Ukraine afloat.
And as the hoped-for ceasefire and peace deal slowly emerge, these assets could form the basis for the creation of a Ukraine Reconstruction Bank — one based along the lines of Germany’s Kreditanstalt für Wiederaufbau, which was set up to finance the country’s reconstruction after World War II.
As the debates in Brussels and member countries continue, the block’s inertia and lack of vision increasingly mean it risks defeat from the jaws of victory. And with the risk posed by the looming immobilization renewal deadline in July, the clock is ticking. However, there is a clear solution to every excuse — what’s really lacking is the political will to act.
And this must change before the EU’s dithering leads to disaster.
