Germany aims to seize €720M of frozen Russian money

BERLIN — At a time when Germany’s ruling coalition is scrambling to find money due to its still-simmering budget crisis, it might be getting an unexpected windfall: a large chunk of frozen Russian money.
Germany’s top federal prosecutor on Wednesday announced a motion to confiscate about €720 million held by a Russian financial institution in a Frankfurt bank account.
“We will not allow Russian funds used to finance the illegal war of aggression against Ukraine to be held unchallenged in German accounts,” Justice Minister Marco Buschmann wrote on X, adding: “Liberal democracy defends itself on the side of the attacked and opposes violence with the law.”
The motion represents an escalation of Germany’s efforts to sanction Russia. If prosecutors are successful, the frozen Russian funds would flow into Germany’s federal coffers, according to an official with knowledge of the case, providing the government with a potential financial boon.
Until now, Germany has moved only to freeze funds held by sanctioned Russian companies and individuals. The €720 million in question — which, according to the official, is held by a subsidiary of the Moscow Stock Exchange — was frozen after the European Union decided in June 2022 to include the institution in sanctions imposed due to Moscow’s invasion of Ukraine.
It’s now up to the Frankfurt Higher Regional Court to rule whether Germany can ultimately confiscate the money. The legal proceedings are likely to be drawn out.
The seizure of frozen Russian money is not without international legal precedent. In May, U.S. Attorney General Merrick Garland announced the first transfer of forfeited Russian assets for use in Ukraine. This month, the European Commission presented a plan to use Russian assets frozen in the EU to help rebuild Ukraine, though wider agreement on that plan is by no means assured.
The prosecutor’s office said it had been able to launch a criminal procedure for seizing the money because “unknown persons responsible for the Russian financial institution” attempted to withdraw the €720 million after it had been frozen, an act that would constitute a violation of German law.
The announcement came just as the German cabinet met on Wednesday to move forward with a new budget for 2024 that mandates painful cuts in various areas. The spending cuts became necessary after a constitutional court ruling blew a €60 billion hole in the budget.
The prosecutor’s move to seize the €720 million is not linked to the budget crisis. The motion was in fact filed on July 7, but was only made public on Wednesday because of delays in finding a defense lawyer for the Russian institution, according to the official with knowledge of the case.
A German government spokesman said on Wednesday that the government has no plans for what to do with the €720 million should the prosecutor’s motion be successful.