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“They opened Pandora’s box”: what will the transfer of income from Russian assets to Ukraine mean for the European Union?

Date: June 18, 2024 Time: 09:45:18

On May 2, the European Union published in its official journal a decision on the fate of Russia’s frozen assets. Photo: Vladimir Smirnov/TASS

– The boys couldn’t resist opening Pandora’s box! – the famous economist Denis Raksha commented on the news on the radio “KP”.

What are you talking about? The fact is that on May 22, the European Union published in its official journal a decision on the fate of Russia’s frozen assets. There are two main new features:

– The EU has no intention of transferring income from frozen assets to Russia even after sanctions are lifted;

– 90% of the revenue to be received from Russian assets will be sent to the EU budget and then allocated to military assistance to Ukraine and its reconstruction.

What type of income are we talking about? As is known, after the start of the SVO, Western countries froze Russian gold and currency reserves, which were stored in their banks. The total amount is approximately 300 billion euros. Around 200 billion of them are in the European Union. Europeans invest this money and receive income from it: approximately between 3,000 and 5,000 million euros per year. It is these revenues, according to published information, that will not go to Russia, but to Ukraine. At the same time, no one encroaches on the assets themselves: we are only talking about “dividends” from your investment.

The press service of the Russian mission to the European Union called this decision a theft. And he stated that “the consequences of the precedent created will be unpredictable.” But what consequences are we talking about and how can the Russian authorities respond?

– The Russian Federation, represented by the Central Bank, whose assets are frozen, will sue. And he will try to stop this process or obtain compensation. It’s very long, very tedious and you don’t know what the result will be. After all, as we see, the courts of the European Union make very different decisions and do not always side with those who impose sanctions, says Denis Raksha. – The second line of behavior is retaliatory measures already in place on the territory of the Russian Federation in relation to the assets of EU states or companies from these countries.

But recently, the head of the Ministry of Finance, Anton Siluanov, recalled that there are no fewer Western assets frozen in Russia than Russian assets in the West. And if something happens, we can give a “symmetric response.” Basically we are talking about funds of Western investors in Russian securities.

This whole situation threatens the European Union with another side effect. As experts (including European ones) have repeatedly pointed out, if the European Union gets its paw on Russian money, this will scare away investors from other EU countries. And central banks in different countries will also gradually stop storing assets in euros. Because everyone will think: what if they do this to me?

– As a result, those countries or companies that invest in the European Union will be able to reconsider their priorities. This does not mean that they will immediately withdraw all their funds from Europe. Money loves silence and tranquility, everything will work out. But over time they can shift the balance of their investments in favor of those jurisdictions that do not make such decisions, Denis Raksha is sure.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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