Report: Estonia to lead way in EU on Russian asset seizures

MOSCOW, Sep 8 (PRIME) -- 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 reported on Friday.

Foreign Minister Margus Tsahkna announced that the government in Tallinn will approve draft legislation in two weeks before sending it to parliament. The eastern E.U. member state, which shares a border with Russia, is pushing the 27-member bloc to move forward with an E.U.-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 euros (U.S. $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 conflict with Russia.

E.U. 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 E.U. governments. The European Commission will propose a legal path to transfer the revenue to the E.U. budget, according to a draft paper on the process seen by Bloomberg.

Estonia’s initiative, in the works since last December, could affect some 35 million euros ($37 million) of E.U.-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 E.U. 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 E.U. are expected to generate some 3 billion euros 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.

End %%md/jst%%