The head of the European Commission, Ursula von der Leyen, declared this Wednesday (28) that the European Union should consider using the proceeds from frozen Russian assets for Ukraine’s military needs.

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“It’s time to start talking about using the windfall profits from frozen Russian assets to jointly purchase military equipment for Ukraine,” von der Leyen said.

According to her, there can be no better purpose for these funds than to spend them on strengthening the defense of Ukraine and the whole of Europe.

“The risks of war must not be exaggerated, but we must be prepared for them, and this begins with the urgent need to rebuild, resupply and modernize the armed forces of member states,” said von der Leyen.

In her speech, the head of the European Commission mentioned the new European Industrial Defense Strategy, which her commission will present in the coming weeks. According to her, one of the main objectives of the strategy will be to prioritize joint purchases.

Around US$300 billion (around R$1.5 trillion) in Russian Central Bank reserves are frozen in the countries

G20 not Brazil

The matter was also on the agenda of the G20 finance ministers meeting, which takes place this Wednesday (28), in São Paulo. US Treasury Secretary Janet Yellen said it was “necessary and urgent” to find ways for frozen Russian assets to help Ukraine, noting that this would encourage Moscow to negotiate a fair peace.

Washington and its G7 partners are divided over what to do with Russian assets frozen by the US, EU, Japan and Canada in 2022 to help Ukraine. Some European countries fear that confiscating Russian assets could set a dangerous precedent.

“While we must act collectively and thoughtfully, I believe there are strong international legal, economic and moral arguments for moving forward,” Yellen said at a news conference in São Paulo ahead of meetings with G7 and G20 counterparts.

“This would be a decisive response to Russia’s unprecedented threat to global stability. It would make it clear that Russia cannot win by prolonging the war and would encourage Russia to come to the table to negotiate a fair peace with Ukraine,” speculated.

French Minister of Economy and Finance, Bruno Le Maire, was more cautious and, in his participation in the G20, stated that the international system has no legal basis for allocating frozen Russian assets for military aid to Ukraine. According to him, international law must be respected.

“I want to be very clear. We have no legal means to seize Russian assets right now. […] The G7 countries, the European countries, must not take any steps that could harm the system of international law. The G7 is based on the law, the G7 must act in accordance with the law”, he highlighted.

And Russia?

Reacting to the call from the US and the European Commission, Russian Finance Minister Anton Siluanov declared that this decision would be wrong and warned that the action would undermine “the foundations and foundations of the financial system”.

“I believe it is fundamentally wrong, because it undermines the foundations and foundations of the financial system, when the gold and foreign exchange reserves of national banks are subject to political restrictions and freezes,” the head of the Russian Finance Ministry said at a press conference.

According to him, Western countries will be harmed by such a decision, as Russia may respond in kind.

“These decisions undermine the foundations of the global financial system that has existed for decades. We have something to answer for. We have also frozen sufficient amounts of assets and investments of foreign investors in our securities,” warned Siluanov.

“There are no fewer foreign assets frozen in Russia than Russian assets abroad,” added Finance Minister Anton Siluanov last Tuesday (26).

Editing: Rodrigo Durão Coelho


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