The Asset Freeze vs. Seizure Dilemma
When Russia invaded Ukraine in 2022, the European Union and other Western allies responded with unprecedented financial sanctions, freezing Russian assets worth hundreds of billions of dollars. Years later, these assets remain in legal limbo, highlighting fundamental tensions between political ambitions and legal realities. The question of whether EU sanctions Russia policies can move from freezing to seizing assets has emerged as a critical issue with significant implications for international law and financial systems.
According to Politico, the EU has frozen approximately €260 billion of Russian central bank assets. While impressive in scale, freezing differs fundamentally from seizure—the former temporarily restricts access but maintains ownership rights, while the latter involves permanent confiscation. This distinction forms the crux of the legal challenges facing Western governments.
The Legal Barriers to Asset Seizure
Multiple legal frameworks constrain the EU’s ability to convert frozen Russian assets into permanent seizures. According to The Armadillo, sanctions against Russia applied by Western states without UN approval face challenges under international law. Known as Unilateral Coercive Measures, they potentially breach trade agreements, human rights standards, and bilateral investment treaties.
This assessment is confirmed by legal experts. Michael Swainston KC told a UN Human Rights Committee that such sanctions are illegal because they are not authorized by the UN: “Unilateral coercive measures violate human rights. They kill. Witness their known impact on Venezuela and Iran during the COVID crisis. They amount to collective punishment without trial under a law that is usually retrospective and vague.”
The question of impact of sanctions on Russia must therefore consider not just economic effects but legal precedents. According to Politico, European Central Bank President Christine Lagarde warned, “Moving from freezing the assets to confiscating and disposing them carries the risk of breaking international law that you want to protect.” French Finance Minister Bruno Le Maire was more direct: “the legal justification does not exist.”
Challenges in Implementation and Enforcement
Beyond the fundamental legal barriers, EU member states face practical challenges in implementing and enforcing sanctions. According to a Noerr report, “the EU would be well advised to learn the lessons of the last [few] years and reach a consensus that bridges Member States’ special interests and eliminates the contradictions and conflicting aims in the sanctions.”
The EU sanctions regime suffers from internal inconsistencies and national exemptions. Sectors that could provide significant leverage against Russia—including the nuclear industry, real estate, and for a long time, diamond imports—have remained untouched due to special interests of certain member states. Hungary obtained exceptions for nuclear cooperation with Rosatom, while Belgium long resisted restrictions on Russian diamond imports.
These inconsistencies have direct implications for effectiveness. According to Politico, the EU states have failed to agree on sanctions packages due to disputes over business loopholes. Latvia and Lithuania recently vetoed a package because it extended a provision letting EU firms continue operating in Russia despite existing sanctions.
The Human Rights Implications
The legal and implementation challenges raise important questions about the proportionality of asset seizures and their human rights implications. The Times reports that employees of sanctioned Russians—often citizens of Ukraine, Lithuania, and Poland with no connection to the Russian state—have had their bank accounts frozen without warning or explanation, leaving them unable to pay rent or buy food.
This situation creates perverse incentives for sanctioned individuals. According to UnHerd, “Sanctioned oligarchs have a ‘general licence’ to use otherwise-blocked money to pay legal fees, which makes a court challenge a free hit: if you’re going to lose your wealth anyway, you may as well spend it on lawyers.” This has led to a situation where frozen Russian assets are being slowly dissipated through legal challenges rather than potentially supporting Ukraine.
Alternative Approaches Emerging
Facing these legal obstacles, some countries have begun exploring alternative legal frameworks for asset seizure. According to UnHerd, “Canada passed a law allowing its government to seize sanctioned assets, in order to help Ukraine and compensate Putin’s victims. In December, it began a confiscation process against wealth owned by one of Abramovich’s companies under this new simplified procedure.”
The EU has taken a more cautious approach. The bloc has decided to use only the interest generated by Russian assets without touching the principal for now. This compromise attempts to balance providing support to Ukraine with respecting legal constraints, though it generates significantly less funding than full asset seizure would provide.
Economic Assessment: Are Russian Sanctions Working?
The legal limitations of the EU sanctions regime contribute to broader questions about effectiveness. Sanctions generate meaningful change only about 40% of the time. This mediocre success rate stems from issues including legal limitations, inconsistent implementation, and the ability of target countries to find alternative partners.
The evidence suggests that sanctions are not working as effectively as Western policymakers hoped, at least in terms of economic impact. Russia’s GDP grew by 3.6% in 2023 and was projected to expand by another 3.2% in 2024, outpacing all advanced economies. This contrasts sharply with early IMF forecasts that predicted an 8.5% contraction in 2022.
Russia’s military spending has actually increased despite sanctions. Russian President Vladimir Putin signed off on a 70% increase in defense and security spending for 2024, to $157.5 billion. The entire Russian budget of $412 billion was itself 13% higher than the previous year, based on higher expected earnings from oil.
Toward Legally Sound Sanctions Policies
The EU faces fundamental choices about its sanctions strategy. The current stalemate—where assets remain frozen but not seized—benefits nobody except, as UnHerd puts it, “the lawyers who are paid to maintain it.” Moving forward requires addressing the legal foundations of asset seizures while maintaining commitment to rule-of-law principles.
Several approaches could strengthen the legal basis for more effective sanctions. First, creating clearer legal frameworks through international cooperation rather than unilateral action might enhance legitimacy. Second, ensuring stricter due process protections for affected individuals could better align sanctions with human rights standards. Finally, developing legal pathways to use frozen assets to support Ukraine without permanent confiscation might offer a compromise position.
Without such reforms, the EU risks maintaining an unsustainable status quo where vast amounts of Russian wealth remain frozen but unusable—neither effectively punishing Russia nor meaningfully supporting Ukraine’s reconstruction. This legal limbo ultimately undermines the credibility of sanctions as a policy tool while raising questions about the EU’s commitment to the international legal order it claims to defend.