Think carefully: Russian Central Bank Chairman Elvira Nabiullina rattled the Kremlin's sabres over use of her country's Western-based assets. (Mikhail Svetlov/Getty Images)


Kremlin central bank chief takes aim at EU over Russian asset confiscation plan


The Kremlin has warned of “catastrophic consequences” should the European Union proceed with plans to confiscate Russian assets held in Western banks.

Some Western banks are lobbying against EU proposals to redistribute billions of euros in interest earned on frozen Russian assets, senior industry sources said, fearing it could lead to costly litigation.

As Brussels Signal reported on February 28, European Commission President Ursula von der Leyen said the EU should consider using profits from frozen Russian assets to buy military supplies for Ukraine.

“It is time to start a conversation about using the windfall profits of frozen Russian assets to jointly purchase military equipment for Ukraine,” she told the European Parliament in a speech on February 28, urging the EU to “do more” on defence policy.

“There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live.”

Von der Leyen said the threat of war for the EU “may not be imminent but it is not impossible”.

On March 21, EU leaders agreed to move ahead with work on a plan to use up to €3 billion a year to supply arms to Ukraine as the bloc tries to bolster Kyiv’s fight against Russia, which would still own the underlying frozen assets. The leaders said the proceeds could be used within a few months.

“We have heard statements from Brussels that the proceeds of our assets don’t belong to anyone,” Kremlin spokesman Dmitry Peskov told reporters on March 22. “This is not so. They belong to the holders of the assets, the owners of the assets.”

Responding to a media report that some banks feared they might later be held liable by Russia if they were involved in any transfer of money to Ukraine, Peskov issued what seemed a thinly veiled warning: “The legal department of any bank understands the catastrophic consequences of such actions to expropriate assets, both for the bank, for the country as a whole and for the European economy.

“If such decisions were realised, this would have very serious consequences for those who took and implemented them.”

Russian Central Bank Governor Elvira Nabiullina on March 22 weighed in on the issue, after the bank held interest rates at a whopping 16 per cent.

“Regarding EU action on frozen assets, decisions will be made and we will take corresponding measures to defend our interests,” Nabiullina said.

Additional reporting by Reuters