why a freeze on Russian assets could hit a French taxpayer

Waging an all-out economic war with Russia This was Bruno Le Mer’s goal. The Economy Minister announced this Sunday, March 20, a freeze on the assets of Russian oligarchs in the amount of 850 million euros. It causes ” 150 million euros of personal accounts in France ” as well as ” half a billion euros of real estate in France, which corresponds to about thirty properties or apartments. “.

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The provision is included in the European sanctions announced in response to Russia’s invasion of Ukraine. To assess the effectiveness of these measures and their implementation, Marianne interviewed Olivier Dorgans, a lawyer and expert on international sanctions.

Marianne : Bruno Le Maire announced the freezing of 850 million euros of assets belonging to Russian oligarchs. And now ?

Olivier Dorgans : This figure should be taken with caution. This seems important, but it is clear that it is negligible compared to the total of Russian assets, estimated at one hundred billion euros. Against all odds, after three weeks, the authorities were unable to achieve more. These are by far the most accessible assets. Now what can we do about it? The philosophy of European law is to prohibit the use of things for the duration of the sanctions. For financial assets, banks will simply block the account, and there can be no more incoming or outgoing flows. However, the accounts continue to earn interest. At the end of the sanctions, the oligarch restores everything.

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As for property, the state has no right to sell it. This raises a number of questions. Who will bear the costs associated with boarding the boat, such as customs mobilization, surveillance costs, and port occupancy? It’s not defined. This may seem trivial, but when reduced to the many directions that emerge, we are talking about several million euros that could eventually be paid out by the French taxpayer.

How do we find the assets of the oligarchs?

The difficulty of tracking assets is central. By announcing a freeze on the assets of the oligarchs, the European Union has two goals: financial assets and tangible assets such as villas, chalets or yachts, all of which constitute ancestral wealth.

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For the first, they must be placed in a bank or investment fund. In both professions, there is a “know your customer” requirement. They need to know who owns which account. Oligarchs rarely invest directly in their own name. They go through different companies. When opening an account, the banker must trace the chain of ownership to the beneficial owner. The oligarchs used a very strong opacity in their infiltration into Western societies.

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The problem exists for material goods as well. Even if the obligation to know the customer exists, it is far less respected. It is always the same. The villa is not directly bought by the oligarch, and sometimes real estate agents are less professional than banks in finding a real client. Often the authorities have strong suspicions, but the question of evidence arises. This work takes a lot of time and explains the need to create task force which integrates information from the General Treasury, Public Finance departments, Tracfin and Customs.

In early March, Bruno Le Maire wanted to turn the asset freeze into an arrest. This Friday, March 18, we learned that the European Union can use the money of the oligarchs to restore Ukraine. Is it possible ?

In one case. For confiscation, it is necessary to prove that these assets or property were acquired through embezzlement of public money. This is the logic of the so-called commodity” ill-gotten “As for the war in Ukraine, NGOs in London are trying to show that there are irregularities in the money earned by the oligarchs. But it is very difficult to prove this. If we ever go without this evidence, we will directly enter into a violation of property rights. Then what the European Union is proposing is a legal fantasy unless we create a new instrument, in my opinion, this is the effect of the announcement.

Sanctions temporarily block oligarchs from accessing their assets. Sooner or later they will return them. Is this really a punishment?

To answer, you need to understand what is going on in their head. They enriched themselves during the collapse of the USSR due to the unrestrained granting of state concessions in the energy sector. These are people who grew up in Soviet times, cut off from the West. During the fall of the USSR, they very quickly westernized their way of life. They appreciate their holiday destinations in Europe and the way of life that they were deprived of in their youth. Thus, the measures that hit them are very symbolic.

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In addition to the asset freeze, those without dual citizenship can no longer travel to Europe. They are definitely cut off from this world to which they are attached. Will this disappointment be strong enough for them to turn against Putin? At this point, it’s premature. But one of the European Union’s unstated goals may be to make them a game changer. If the post-sanction Russian economy continues to crumble and power falters, frustrated oligarchs could be the ones to oust Putin.

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