The Kremlin issued a strong warning on Wednesday, declaring that it would pursue legal action against any individuals or nations involved in what it described as the ‘theft’ of frozen Russian sovereign assets in Europe. This stern message comes as European leaders gather to discuss a controversial proposal: a $165 billion loan to Ukraine, collateralized by these very frozen funds.
Dmitri S. Peskov, the Kremlin spokesman, made it clear that Moscow sees no difference between outright seizure of its frozen assets and using them as collateral for a loan to Ukraine, despite European leaders’ attempts at a distinction. ‘We are talking about theft,’ Peskov asserted during a press call.
These remarks follow closely on the heels of President Vladimir V. Putin’s decree aimed at accelerating the redistribution of assets within Russia. Experts suggest that if Europe proceeds with the loan, Russia might retaliate by seizing the assets of foreign companies and individuals from supporting nations. Moscow has already taken over several Western company operations as part of wartime economic shifts.
Last year, Russian Finance Minister Anton G. Siluanov stated that Russia had frozen an equivalent amount of Western assets to those frozen by the West, vowing a symmetrical response. Since the conflict began, Russia has been diverting profits from Western assets within its borders into state-controlled, frozen bank accounts.
European officials are increasingly turning their attention to Russia’s frozen funds, especially as U.S. aid to Ukraine faces uncertainty under President Trump. The European Union’s executive body is pushing forward with a plan for an interest-free ‘reparations loan’ totaling 140 billion euros (approximately $165 billion) for Ukraine. This loan is cleverly structured to leverage Russian assets without directly confiscating them, and would only be repaid if Russia eventually pays reparations for war damages. The United Kingdom is also exploring a similar initiative.
On Tuesday, European Commission President Ursula von der Leyen emphasized the urgent need for a more stable approach to military aid. ‘This is why I have put forward the idea of a reparations loan that is based on the immobilized Russian assets,’ she stated.
She clarified that the loan would be distributed in installments and would specifically avoid direct seizure of Russian assets. It’s worth noting that the G7 nations have already provided a loan to Ukraine, utilizing the interest generated from these Russian assets as collateral.
This strategy to further tap into the frozen assets gained significant momentum following von der Leyen’s initial proposal and a similar plan put forth by German Chancellor Friedrich Merz last week. Merz, facing criticism from a growing far-right opposition at home for allocating German taxpayer funds to Ukraine, finds this an appealing alternative. However, the Belgian Prime Minister, whose country holds the majority of these Russian assets, has voiced strong opposition, citing disproportionate risks to Belgium.
‘It’s a very interesting geopolitical turn,’ observed Maria Shagina, a research fellow at the International Institute for Strategic Studies. She highlighted that with Mr. Trump’s isolationist foreign policy, ‘Europe needs to engage and implement a new strategy.’
Moscow’s Official Stance
This shift in European policy is certainly unwelcome news for Russia, especially considering President Putin’s long-term efforts to bolster his nation’s financial stability.
The approximately $300 billion in Russian sovereign assets frozen in Western nations, primarily within the European Union and Britain, represent nearly half of the Russian Central Bank’s gold and foreign-exchange reserves, as reported by Russia’s Finance Ministry in 2022. These assets were frozen soon after Russia’s full-scale invasion of Ukraine began.
Russia, it seems, considers the proposed European ‘financial engineering’ of the loan—designed to avoid direct seizure of Russian assets—as merely a semantic distinction, fundamentally viewing it as an act of confiscation.
On September 15, Dmitri A. Medvedev, deputy chairman of Russia’s national security council, vowed that Russia would relentlessly pursue EU member states and ‘European degenerates from Brussels’ who attempt to confiscate Russian property, promising to do so ‘until the end of time’ and ‘by every means possible.’
He further stated that Russia would target Europeans ‘in all possible international and national courts,’ and, chillingly, ‘in some cases, even out of court.’
Potential Russian Retaliation
Analysts believe the Kremlin might retaliate by targeting European assets within Russia. This could involve seizing funds held in ‘Type-C’ accounts, where Moscow has already sequestered Russian earnings belonging to foreign entities and individuals since the West froze its sovereign assets. Foreigners require Russian government approval to withdraw funds from these accounts.
Another potential move by Moscow is the seizure and sale of assets and shares belonging to foreign companies operating in Russia. Since the war began, Russia has already absorbed the operations of several European firms, notably the Danish brewing giant Carlsberg.
Alexander Kolyandr, a nonresident senior fellow at the Center for European Policy Analysis, suggested that Russia might mirror Europe’s strategy by issuing a loan against the Type-C account assets to bolster its strained state budget. While the exact amount in these accounts remains undisclosed, he estimated it to be in the low tens of billions of dollars.
Kolyandr also raised the possibility of an expedited outright seizure of properties or shares held by individuals and companies from European nations supporting the Ukraine loan. The independent Russian online publication, The Bell, has estimated that Western assets worth hundreds of millions of dollars could ultimately be at risk.
In September, President Putin himself cautioned that any European action to appropriate Russia’s sovereign assets ‘would completely obliterate all principles of international economic and financial activity, and would undoubtedly inflict immense damage on the entire global economy.’
Speaking in Minsk, the Belarusian capital, in June, Putin asserted that the West’s ‘theft’ of Russia’s reserves would only hasten the fragmentation of global financial systems. Russia has been actively urging other nations to shift their trade away from the U.S. dollar and euro, advocating for the development of payment systems impervious to Western influence.
‘There’s constant talk about how they’re planning to steal our money,’ Putin remarked. ‘But once that happens, the movement toward regionalization of payment systems will accelerate and become, without a doubt, irreversible.’
He chillingly concluded, ‘Perhaps it’s worth paying for.’