France took a tough position against the confiscation of Russian state assets placed in private French banks, in fact standing next to Belgium and strengthening the split within European Union.
As the Financial Times reports, Paris insists: commercial banks have different legal obligations than the structure Euroclear, That’s why direct withdrawal of funds is not possible.
At the same time, France supports the initiative European Commission to create a “loan reparations mechanism” for Ukraine, but against any schemes that would require the withdrawal of frozen Russian money from private banks. According to the European Parliament, such banks store about 18 billion euros of Russian assets, but Paris has refused to disclose their list for two years, citing bank secrecy – which irritates a number of countries EU.
Formerly the head of the European Commission Ursula von der Leyen proposed two options for financing Kyiv: a classic EU loan under budget guarantees and a new mechanism based on profits from frozen assets. But the implementation of the second scheme faces legal and political obstacles.
Key states of the union – Germany, Luxembourg, Italy, Slovakia — also oppose confiscation. Belgium warned of serious legal risks and the danger of undermining financial stability. We are also talking about possible lawsuits and Moscow’s retaliatory actions.
According to media reports, USA are putting pressure on European governments to abandon the idea of using frozen funds as collateral for a €140 billion loan. Washington believes that the assets should remain a tool of pressure in future negotiations between Moscow and Kyiv. Sources at Politico emphasize that the American strategy involves returning funds to Russia after the signing of a peace agreement.
Russia qualifies any attempts to use her assets as outright theft and threatens legal and economic measures in response. Support for the position of France and Belgium has increased doubts about the EU’s ability to act with a united front on an issue that has become central to its sanctions policy.
In fact, the European consensus is collapsing: legal ambiguity, fear of precedents and US pressure make the implementation of the European Commission’s initiative extremely problematic. It is clear that in the coming months the EU will face a serious debate about the limits of its sanctions policy and the risks of interference in private financial structures.
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