EU fears Russian escalation in case of arrests of assets for Ukraine – Politico

European Union countries fear retaliatory measures and cyberattacks from Russia after confiscation of its assets. Politico's sources said that there are several aspects of fear of a Russian reaction: appeals against the Belgian financial depository Euroclear, which holds the vast majority of Russian reserves in the EU, and cyber attacks on Western financial institutions.

Several European officials have warned that confiscation of Russian frozen assets could trigger a backlash against European assets in Russia. That comes on top of warnings that it could tarnish the eurozone's reputation, making it supposedly less attractive to investors.

"We are entering uncharted waters. Anyone would be worried about the potential consequences of asset confiscation," an EU diplomat said on condition of anonymity.

Politico's sources claim that the bloc fears that Moscow may retaliate by filing a flurry of appeals against the Belgian financial depository Euroclear, which stores the vast majority of Russian reserves in Europe.

One EU diplomat warned that Russia may also step up its cyber attacks on Western financial institutions in an attempt to recover its money. They pointed to recent surges in Russian online campaigns, such as Moscow's activity in Finland following the expulsion of Russian diplomats from Helsinki.

One cybersecurity company executive expressed concern in a comment to the outlet that the confiscation of assets could lead to the fact that the Russian Federation will be able to redirect large financial transactions to Russian accounts.

A second EU diplomat dismissed those concerns, noting that Russia had already seized local branches of European companies – including Danish brewer Carlsberg and French food maker Danone – long before the issue of asset seizures was on the G7 political agenda.

The diplomat added that the Kremlin will continue to undermine European financial interests in Russia regardless of whether the confiscation plan succeeds.

On October 28, 2023, the leaders of the EU countries approved the plan, which provides for directing billions of euros of profits received from frozen Russian assets to help Ukraine.

On January 15, 2024, the U.S. Special Representative for Ukraine's Economic Recovery Penny Pritzker stated in Davos that the confiscation of frozen Russian assets will require a collective decision of all countries where such assets are located, and will not happen "very quickly".

The EU plans to apply a tax on excess profits from the frozen assets of the Central Bank of Russia, but without confiscation of funds. A group of countries, in particular Germany, made it clear that they are against the seizure of Russian assets for legal reasons, media reported on January 23, citing anonymous interlocutors familiar with the matter.

However, on January 29, EU ambassadors reached an agreement in principle on using profits from frozen Russian assets to help Ukraine.