The case

Russian central bank funds abroad have been frozen (at Euroclear), but these funds cannot be spent directly without violating international law. A new EU proposal now envisages using the interest income for arms purchases and reconstruction.

What is Switzerland going to do if the proposal gains a majority in the EU?

Source: today’s NZZ and OIiver Diggelmann, University of Zurich International Law – SRF 1 10 vor10 (03/20/2024) German

The commentary

To this date, Switzerland has adopted almost all EU sanctions against Russia. However, dealing with frozen funds (CHF 7.4 bn; May 2023) may prove to be tricky, not least because the funds have been held by private banks and not by the National Bank.

According to Professor Diggelmann, University of Zurich, the proposed use of interest income is not legal. The key question is whether (…) “there would be a possibility of abolishing state immunity in extreme cases – such as in the case of a crystal-clear war of aggression – with a common international reparations mechanism and thus developing international law. The decisive factor would be a broad coalition (…). It would also need to be clearly limited to a clearly defined exceptional case so that state immunity is retained in principle. There would also need to be a clear regulation as to what the money would be used for, namely typically for reconstruction.” (Quote from an interview granted to “10 vor 10” on 20 March 2024)

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