Estonia plans to be the first European Union nation to legalize the seizure of sanctioned Kremlin-linked assets to fund Ukrainian reconstruction this year, a move that the Baltic nation’s top envoy said would “really hit” Russia.
(Bloomberg) — Estonia plans to be the first European Union nation to legalize the seizure of sanctioned Kremlin-linked assets to fund Ukrainian reconstruction this year, a move that the Baltic nation’s top envoy said would “really hit” Russia.
Foreign Minister Margus Tsahkna announced that the government in Tallinn will approve draft legislation in two weeks before sending it to parliament. The eastern EU member state, which shares a border with Russia, is pushing the 27-member bloc to move forward with an EU-wide plan as it untangles the legal complexities of confiscating sanctioned assets.
“This will really hit oligarchs — this will really hit the Russian state,” Tsahkna said in an interview on Thursday, adding he expected that the legislation will inevitably trigger Russian lawsuits.
With some €200 billion ($215 billion) in Russian central bank assets frozen, some European leaders have called for a portion of that to go to rebuilding Ukraine as it endures its 18th month of war with Russia.
EU officials met with member states this week to outline a blueprint to impose a windfall tax on profits generated by the Russian funds. Discussions will continue next week with experts of all the 27 EU governments. The European Commission will propose a legal path to transfer the revenue to the EU budget, according to a draft paper on the process seen by Bloomberg.
Read More: EU Moves Forward on Plan to Tax Sanctioned Russian Assets
Estonia’s initiative, in the works since last December, could affect some €35 million ($37 million) of EU-sanctioned financial assets owned by Russian businesses in Estonia. Under the Estonian scheme, Ukraine’s international register of damages would be used as the basis for expropriating sanctioned assets. Drafting the initiative in line with EU laws was complicated by Estonia’s strong safeguards for private ownership, Tsahkna said.
Commission President Ursula von der Leyen previously said she would put forward a legislative proposal before the summer break, but that timeline has since slipped.
The Russian central bank assets immobilized in the EU are expected to generate some €3 billion in windfall profits. Over half the assets are in cash and deposits, while a “substantial amount” of the remainder is in securities that will transform to cash as they mature in the next two to three years, Bloomberg previously reported.
–With assistance from Jorge Valero.
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