Belgium, where the most Kremlin assets are frozen, is not against their confiscation, but says it is necessary to create a mechanism

DAVOS, Switzerland (Reuters) – Belgium is not opposed to confiscating 280 billion euros of frozen Russian central bank assets, but there must be a clear mechanism, such as using the assets as collateral to raise funds for Ukraine, Prime Minister Alexander De Croo told Reuters.

After President Vladimir Putin sent troops into Ukraine in 2022, the United States and its allies banned transactions with Russia’s central bank and Treasury, freezing about $300 billion of sovereign Russian assets in the West.

The G7 countries are discussing the possible confiscation of frozen Russian assets, although some G7 members are concerned that it would set a dangerous precedent, the lack of a mechanism and the risks of such a move for the countries’ central banks.

De Croo told Reuters in Davos that Belgium was open to a discussion about what to do with interest on frozen Russian assets and the assets themselves.

“We don’t say no to the confiscation of assets. But we need to work on the mechanism. For example, they can be used as collateral to raise funds for Ukraine,” he said.

“We are open to further discussion and are ready to participate in solving the issue, finding a legal basis for these transfers to Ukraine, without destabilizing the global financial system,” he said.

De Croo emphasized the risk of undermining financial stability, as central banks often deposit assets with each other.

The lion’s share of assets – essentially securities invested in by the Russian Central Bank – are frozen in Euroclear, a depository in Brussels.

Some securities are redeemable and therefore convertible into cash, a transaction that is taxed at a rate of 25%, he said.

“If there is any taxable income, we separate it so it can go to Ukraine,” De Croo told Reuters in Davos. According to him, the tax on frozen assets amounted to about 1.3 billion euros in 2023, and in 2024 it will be about 1.7 billion euros.

US Treasury Secretary Janet Yellen last year raised concerns about significant legal obstacles to seizing frozen Russian assets, but recently backed exploring the idea amid tight funding.