In a controversial move that threatens to further strain already fraught relations with Moscow, the European Union is preparing to redistribute roughly €3 billion ($3.4 billion) of frozen Russian assets to compensate Western investors trapped by retaliatory measures in Russia. The decision, reported by Reuters on May 2, marks another milestone in the West’s evolving use of financial instruments as weapons of geopolitical confrontation.

According to the report, Belgium-based clearing house Euroclear, which currently holds about €200 billion of Russian sovereign and private funds, has begun implementing plans to release €3 billion from a pool of €10 billion in liquid cash assets tied to individuals and entities blacklisted under EU sanctions. The clearing house received authorization from its supervising authority to “unfreeze the compensation amounts and make these available to our participants,” per an internal briefing document dated April 1.

This redistribution is enabled by modifications to the EU’s sanctions regime adopted late last year, allowing for the selective disbursement of frozen Russian assets in favor of Western claimants. The move comes amid ongoing efforts by EU policymakers to strike a balance between legally questionable seizures and politically motivated gestures designed to bolster support for Ukraine.

The Kremlin, however, has been unequivocal in its condemnation, describing the action as outright “theft” and a blatant violation of international law. Russian authorities argue that the seizure and redistribution of their sovereign and private assets erode the principles underpinning the global financial system, setting a dangerous precedent that could ultimately backfire on Western........

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