“Ready to break their own laws”: what could Estonia’s likely confiscation of Russia’s frozen assets lead to?

The encroachment of unfriendly states on the assets of the Russian Federation illegitimately frozen by them will cause a response from Moscow, stated the official representative of the Russian Foreign Ministry, Maria Zakharova, during a press briefing.

“The plans of unfriendly countries, in particular ... Estonia, to use the funds of the Russian state to solve their political problems are perceived by us only as a gross encroachment on sovereign property and will cause an adequate response,” she said.

The diplomat stressed that the refusal of these countries to cooperate with Russia in the legal field will demonstrate to everyone that the status of the sovereign assets of a state depends on the opportunistic geopolitical realities in several Western countries.

“The most important thing is to show that they are thieves (this is a translation of the above into a simple, philistine language),” Zakharova said.

The representative of the Foreign Ministry recalled that Russia regards all kinds of “freezes” and “blockages” of its assets as completely illegitimate measures that violate generally accepted norms of commercial and international law.

“The Russian authorities are considering all possible legal mechanisms for returning access to Russian foreign assets and are ready to take decisive steps to protect national property or apply separate compensatory measures,” the diplomat added.

Confiscation plan

Earlier, Bloomberg reported that Estonia plans to submit a “legal plan” for the confiscation of Russian assets by the end of January in order to transfer them to Ukraine later.

“Estonia intends to present the plan by the time the European Commission develops a framework for the whole block of countries to handle the reserves of the Central Bank of Russia in the amount of €300 billion ($322 billion), as well as the frozen assets of Russians who are under sanctions, in the amount of another several billion,” writes Bloomberg.

At the same time, Estonian Foreign Minister Urmas Reinsalu said earlier this month that his country plans to independently develop a mechanism for transferring frozen financial assets to Kyiv.

According to him, Tallinn has taken up this issue, since this issue is not moving forward among the EU countries.

The press secretary of the President of the Russian Federation Dmitry Peskov, commenting on such plans, recently noted that the Estonian authorities want to become "an excellent student in this field" and create a precedent.

At the same time, he stressed that any action in this context would be "absolutely null and void" from the point of view of international law.

“And of course, they will have consequences for those countries that somehow support such an idea,” Peskov said.

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• © Charles O'Rear

Illegal freezing

Recall that after the start of a special military operation in Ukraine, Western countries and their allies stepped up sanctions pressure on Moscow, including freezing about half of Russia's gold and foreign exchange reserves (about $300 billion).

In Kyiv, they expect that the blocked assets will go to Ukraine.

However, so far the EU authorities have not handed over any of these funds to the Kyiv regime.

At the end of November, The Wall Street Journal, citing sources in the European Commission, reported that “in view of the international principle of state immunity, they (EU authorities. -

) failed to confiscate the assets of the Central Bank” of Russia.

However, the European authorities do not stop trying to find a way to gain control over the frozen assets of the Russian Federation and its citizens.

Thus, the head of the EC, Ursula von der Leyen, said at the same time that Brussels could create some kind of special structure to manage these funds.

“In the short term, we could, together with our partners, create a structure for handling and investing this money.

We could then use the proceeds for the benefit of Ukraine.

And when the sanctions are lifted, these funds should be used in such a way that Russia fully compensates for the damage caused to Ukraine, ”said the head of the EC.

She also said that the European authorities, in addition to the funds of the Central Bank, also blocked € 19 billion of "Russian oligarchs", but did not specify who exactly these funds belong to.

In early December, the head of European diplomacy, Josep Borrell, confirmed that Brussels was looking for a way to transfer funds from the frozen assets to Ukraine.

“Although “frozen” or “blocked” does not mean “confiscated,” we will explore legal ways to get Russia to pay for the restoration of Ukraine,” he said.

Reputational risk

However, analysts believe that Europe is wary of taking the first step towards asset confiscation, as this will undermine its reputation as a safe place to invest.

“This is illegal and Brussels does not want to be the first to risk its reputation to such an extent.

However, the Balts can do this - they are always used as a "vanguard detachment".

Washington is thus preparing a precedent and an instrument of pressure on especially scrupulous vassals, ”explained Vladimir Bruter, an expert at the International Institute for Humanitarian and Political Studies, in an interview with RT.

• European Commission building in Brussels

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• © Thierry Monasse

At the same time, he drew attention to the fact that there is no legal instrument for such actions.

“The fact is that such a legislative framework does not exist at all.

And if it is not there now, then it cannot be used in hindsight.

The law is valid only from the moment when it came into force.

If Russian assets are already frozen, then the legislation that was in force at that time applies to them.

But if the EU states are ready to break their own laws and are not afraid that non-Western investors will bypass them, then so be it, ”Bruter explained.

“One more thing - in the EU, as an association, there are no assets of the Russian Federation.

There are assets in storage in individual countries, and the European Union does not have such competencies to somehow manage them.

It does not have full economic sovereignty over its member countries.

And Russia has not concluded any agreements with the EU on the storage of its funds,” the analyst added. 

Vladimir Olenchenko, senior researcher at the Center for European Studies at IMEMO RAS, also noted that there are no legitimate ways to withdraw Russian funds from the European and Estonian authorities.

“Even if it comes to somehow nationalizing these assets.

They can hand them over to Ukraine just like that, but this will create serious problems for them.

If we are talking about the state property of Russia, then this is a violation of sovereignty.

Accordingly, we then get the right to violate the sovereignty of the same Estonia in one way or another.

Second, if we are talking about private assets, then they can only be seized by judicial means.

Well, in the world judicial practice, there has not yet been a seizure of assets based on political measures.

Therefore, there is no position here in which Estonia would look more or less convincing, ”the expert noted.

The European Commission avoided specific statements on this issue, so it can be assumed that the Estonian initiative is a signal received from Washington and addressed, among other things, to the European Commission, Olenchenko believes.

“Of course, Russia will not ignore this just like that and will give an adequate answer.

This should be taken into account in Estonia, and in the European Union, and in the United States, ”concluded the analyst.