Confiscating Moscow’s frozen central-bank reserves must be “legally watertight,” Dominic Johnson has urged

Any step towards confiscating frozen Russian assets must be done in strict accordance with international law, Britain’s investment minister, Dominic Johnson, said on Tuesday in an interview with Reuters.

Earlier this week, the EU Council reported that the bloc’s envoys had reached an agreement that is expected to allow Brussels to transfer the income generated by Russia’s frozen central bank reserves to Kiev. The G7 is planning to begin discussions on the legality of such a move at a meeting in February. 

“There’s a good amount of work to do,” Johnson told the news agency during a visit to Washington where he discussed the issue with US Deputy Treasury Secretary Wally Adeyemo “We’ve got to make sure that we get the detail right … We’ve got to make sure these things are legally watertight.”

The UK needs to protect its reputation as a “safe and stable” place to invest, according to Johnson, who highlighted the acute need to make sure that the rest of the world feels reassured that London is “sticking to the rule of law and property rights.”

Shortly after the launch of Moscow’s military operation in Ukraine, the EU, US and allies froze around $300 billion of Russian central bank assets. Since then, the G7 nations have been debating seizing the assets and transferring them to Kiev. 

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Most of the frozen reserves are currently sitting at Belgium’s Euroclear, a central security depository, generating billions as securities reach maturity and are reinvested. Belgium announced earlier this month that it would provide Ukraine with military aid to the tune of €611 million and that the source of those funds would be income from the frozen Russian assets. 

Only about $5-6 billion of the immobilized Russian reserves are being held in the US. Earlier this month, a US Senate committee approved legislation that would help set the stage for Washington to seize those assets.

The Kremlin has warned that any step related to Russian reserves by the Western allies would amount to “theft,” highlighting that confiscation of the funds or any similar move would violate international law.

Last year, President Vladimir Putin ordered the establishment of a mechanism to temporarily take over foreign assets in Russia in the event that other nations seize Russian private or government property in their jurisdictions, or threaten the national, energy, or economic security of the country.

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