How to manage the risks linked to the use of Russian assets immobilized by the EU?
As the European Union plans to use frozen Russian sovereign assets to finance the reconstruction of Ukraine, this unprecedented decision raises concernsnumerous legal, financial and political risks. Based in Brussels, Me Twagiramungu Innocent analyzes the issues at stake in this sensitive matter and suggests avenues for prudent management consistent with international law.
An unprecedented project that raises questions of international legality
The seizure of a State’s sovereign assets, even within the framework of sanctions, remains an exceptional measure in public international law. If the EU decided to take this step by having thesome 300 billion euros of Russian assets frozen, it would expose itself to major litigation. Russia could indeed challenge this confiscation before international courts, arguing a violation of its sovereign immunities and property rights.
Beyond the purely legal risks, such a decision would create aprecedent with serious consequencesfor international financial stability. Other states could be tempted to invoke this precedent to justify their own seizures of foreign assets, opening the way to a general weakening of the protection of sovereign assets.
Belgium on the front line facing financial and systemic risks
As the host state of Euroclear, Belgium is particularly exposed to the consequences of possible confiscation. If Euroclear were to be ordered to return Russian assets, it could facerecapitalization needs of several billion euros, directly threatening the stability of the Belgian financial center.
The Belgian government would then find itself faced with a difficult choice: let Euroclear go bankrupt, with major systemic repercussions, or bail it out urgently, at the cost of a colossal budgetary effort. In both cases,the consequences for the Belgian economy and public finances would be considerable.
Preserving European unity and the international credibility of the EU
Beyond the purely financial aspects, the management of this issue also involves major political issues for the European Union. A hasty or legally ill-founded decision could in factexacerbate differences between Member States, some favoring a pragmatic approach while others insist on respect for international law.
It is the very credibility of the EU, as a normative power attached to the rule of law, which could be damaged on the world stage. To avoid this pitfall, it is crucial that any decision is based ona solid and explicit legal basis, the result of a European consensus and not of a forced passage.
Building an alternative solution that respects international law
Faced with these multiple risks, it is the responsibility of jurists to propose creative avenues to reconcile support for Ukraine and respect for the fundamental principles of international law. Rather than outright confiscation,a mechanism for voluntary contributions from Statescould thus be considered, as could a special fund financed solely by the interest on frozen assets.
Whatever option is chosen, it is essential to clearly dissociate freezing – a precautionary and reversible measure – from confiscation, which constitutes a serious and definitive attack on state sovereignty.This legal education is essentialto prevent any confusion in the public debate.
The contribution of lawyers, a key asset for navigating troubled waters
In such a sensitive and complex matter, the Belgian and European authorities more than ever need the insight of experienced lawyers, capable of carefully analyzing the risks and proposing innovative solutions.
Formerly of the Catholic University of Louvain, Maître Twagiramungu puts his in-depth expertise in international law and geopolitical issues at the service of public and private decision-makers.
Responsive, rigorous and creative, he supports his institutional clients in the development of tailor-made legal strategies, combining legal security and political pragmatism.
Any initiative affecting sovereign assets must be examined in light of its impact on state sovereignty, European monetary credibility and international stability.