The intention of the EU to use frozen Russian assets to invest in order to receive dividends and send them to Kiev is not a good idea, Maria Demertzis, a senior researcher at the Bruegel Institute in Brussels, wrote in an article for L’Echo.
According to the author of the article the EU countries have blocked at the moment about €200 billion from the reserves of the Central Bank. Brussels assumes that there are ways to manage these assets to generate significant revenues in the range of €0.6 billion to €4.7 billion per year.
However, no investment is without risk, the expert warns. However, the current rules stipulate that if sanctions are lifted in the future, asset owners must return the assets in full plus the interest due, as agreed in the contract before the sanctions were imposed.
In addition, setting up a fund to manage the Central Bank’s assets is a costly undertaking, but under EU rules Brussels should not incur any costs to manage the funds of the sanctioned country.
Apart from the economic risk, there is also a legal risk: it is unclear whether the idea would be supported by an international court. On top of that, investing such a sum over a short period of time could cause volatility in the market.
The author advises EU leaders to “resist the temptation” to use Russian assets for profit and “not to exacerbate an already difficult situation”.
(No Ratings Yet)
Loading...