EU seeks new legal pathways for Russian asset confiscation

Good morning and welcome to Europe Express.

The European Commission is set to unveil plans today to toughen the enforcement of its sanctions regime. One of the aims of the new measures is to better pave the way for Russian asset seizures — a legal minefield that has seen a plethora of creative solutions. We’ll run you through the proposals and what chances of success they have.

Ukraine’s speed in collecting evidence and prosecuting Russian soldiers for war crimes has not gone unnoticed. We’ll hear from a former judge at the International Criminal Court currently advising the Ukrainian chief prosecutor.

And in agricultural news, ministers yesterday discussed the idea of further loosening environmental standards to beef up production and counter some of the impact of the war.

A quick reminder that we’re off tomorrow and Friday, but Europe Express Weekend will be in your inbox on Saturday as per usual.

Legal pathways for asset seizures

The EU’s sanctions regime has long been dogged by uneven enforcement, given it is down to the 27 member states to decide how to crack the whip in their own jurisdictions, writes Sam Fleming in Brussels.

The commission wants to take a step towards remedying the situation by seeking capitals’ backing for proposals making the evasion of sanctions a criminal offence, while also introducing rules improving efforts to trace and freeze assets.

Officials hope that the new measures will open up legal avenues permitting the confiscation of assets belonging to sanctions-hit Russian oligarchs, with the hope that some of the proceeds could eventually be used in the reconstruction of Ukraine.

There are two key measures due to be rolled out by the commission today, according to draft documents seen by Europe Express.

One is a proposed directive on asset recovery and confiscation, which aims to streamline processes identifying, tracing and seizing assets linked to illegal activities. One of the goals is to tighten the net and prevent sanctions-hit oligarchs from squirrelling away yachts, cars, equities and luxury villas from the prying eyes of the authorities.

The second element is a proposal for the council to empower Brussels to table legislation making sanctions evasion a criminal offence throughout the union. As a communication from the commission explains, national systems differ significantly in how harshly they deal with sanctions dodging.

In 12 member states, violating sanctions is solely a criminal offence, while in 13 it can be either an administrative or a criminal matter, according to the draft documents. In two member states, sanctions evasion is purely an administrative violation. Penalties also differ wildly between the EU countries.

Top Brussels officials including justice commissioner Didier Reynders want to toughen the rules to ensure the five rounds of sanctions on Russia and its oligarchs have extra teeth.

Among the new offences Brussels proposes are providing funds to a sanctions-hit person or company, importing or exporting technology covered by EU trade bans, concealing the assets of someone subject to sanctions, or engaging in activities that seek to circumvent the restrictive measures.

Making sanctions dodging a criminal offence across the union would, it is hoped, discourage forum-shopping by offenders seeking to operate in member states with less severe regimes.

It would also potentially make it easier for authorities to seize assets, given this generally can only be done as part of a criminal process. If EU authorities had stronger powers to confiscate assets that oligarchs seek to hide away, these assets could ultimately be liquidated and used to seed a Ukraine reconstruction fund — or so the thinking goes.

Not all EU politicians are comfortable with the idea of seizing assets and using them to rebuild Ukraine. German finance minister Christian Lindner stressed in a Financial Times interview last week that “countries based on the rule of law guarantee private property” and that the hurdles for confiscating it are very high.

Lindner suggested that oligarchs could instead be persuaded to contribute towards reparations for Ukraine, on a “voluntary basis”.

Should the EU change its legislation to allow for Russian assets to be seized and sold to pay for Ukraine’s reconstruction? Tell us what you think and click here to take the poll.

Warp speed

The speed at which Ukrainian authorities are collecting evidence and mounting criminal prosecutions for Russian war crimes, while the war is still going on, is not going unnoticed.

Howard Morrison, a former judge at the International Criminal Court in The Hague, has seen how difficult it is to retrieve evidence from mass graves in the former Yugoslavia or in Rwanda — and even harder to get the top officials extradited and put on stand.

But in Ukraine, just three months into the war, a Kyiv court on Monday handed down the first conviction for war crimes in the conflict (a 21-year-old Russian soldier who confessed to shooting an unarmed civilian under pressure from a commanding officer).

Morrison, who is advising the Ukrainian general prosecutor on what would constitute evidence in an international tribunal, told a small group of journalists yesterday he was impressed by the “determination of the investigators” who are collecting evidence and have already put together “an enormous amount of cases”. (The Ukrainian chief prosecutor said cases already numbered more than 13,000.)

“The fact that someone was already indicted based on his own admission and sentenced to life in prison is proving that they are working at a pace that surprised a lot of people,” said Morrison.

Drawing lessons from the special tribunals set up to deal with war crimes committed in the former Yugoslavia and in Rwanda, he said the International Criminal Court or a special tribunal were avenues Ukraine could pursue to eventually put Russian president Vladimir Putin on the stand. National prosecution in absentia in Ukraine or in other countries could also be a possibility.

“I’m always optimistic in these cases,” said Morrison. “In the Balkans, Rwanda, the Central African Republic, a lot of people who thought they’d never come before the court eventually did.”

Chart du jour: Back to Donbas

Read more here about why after three months of war, the Russian offensive has retreated from Kyiv and is now concentrated in Ukraine’s south-eastern Donbas region, most of which was already occupied before the February invasion.

Brown agriculture

Moves to “green” the Common Agricultural Policy are under threat from the war in Ukraine, writes Andy Bounds in Brussels. Both Russia and Ukraine are big exporters of grains and EU farmers say they need to grow more to compensate for the wheat and sunflower seeds unharvested there or stuck in warehouses.

The European Commission agrees — up to a point. First it allowed member states to let farmers plant on land normally left fallow to support flora and fauna. It is now considering requests from several countries to do the same in 2023.

It is also under pressure to postpone plans to introduce mandatory crop rotation. This ancient practice means you do not plant the same crop two years in a row. Research shows that a constant demand from the same plants exhausts the nutrients in the soil.

The rule should come into force in 2023 but Germany and other governments want to delay it by at least a year.

That would allow wheat fields to grow more wheat next year, filling some of the gap left by Ukraine and Russia. Ukraine alone provides half the EU’s maize, a fifth of its wheat and a quarter of its oil seeds, mostly used for animal feed.

Agriculture ministers discussed the idea yesterday. Janusz Wojciechowski, agriculture commissioner, told reporters he was in favour. “This should be considered to grow the crops we specially need, especially wheat.”

He admitted it was “not a good situation from an agri-technical perspective” but added: “If we need to increase production, that should be allowed. That is my personal opinion but it is being analysed by the entire European Commission. A majority of member states supported the idea.” 

However, Marc Fesneau, French minister of agriculture and food sovereignty, was more cautious, warning that waivers “can be applied ad infinitum”. 

“We are going to need to assess and see whether this is the appropriate solution for food security. We have to look at the economic and environmental repercussions.”

What to watch today

1. ECB president Christine Lagarde speaks at the World Economic Forum in Davos

2. EU council chief Charles Michel visits Sweden and Finland

Notable, Quotable

I think it is feasible we are finalising [Poland’s recovery plan] already in the nearest days or a week

• Final stretch: Poland’s spending plan for its €36bn slice from the NextGenerationEU recovery plan is inching towards the green light from the European Commission, a year after Warsaw submitted it.

• Hungarian escalation: Viktor Orbán yesterday pulled the plug on any hopes for the approval anytime soon of the EU’s stalled oil embargo on Russia and declared a state of emergency, giving his government rights to rule by decree.