Switzerland: Frozen Russian assets to be used by Ukraine

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On Thursday, Swiss lawmakers backed by a narrow majority positions aimed at allowing the use of frozen Russian state assets to finance war reparations in Ukraine.

This was indicated by AFP.

The issue has been hotly debated in Switzerland, where discretion in the key banking industry and the country’s tradition of neutrality are highly valued.

The upper house of parliament voted 21:19 in favor of a series of proposals backed by the government, with three abstentions. The House of Commons passed them last year.

They pave the way for the government to work on an international legal basis for using frozen assets of aggressor states to pay reparations in attacked countries.

Reserves and assets of the Russian central bank are worth more than 8 billion dollars and are held in Switzerland.

“The facts are really very clear,” Foreign Affairs Minister Ignazio Cassis told the upper house of parliament.

“Russia has seriously violated international law. Therefore, it must compensate for the damage caused.

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“There are currently international discussions on compensatory mechanisms and Switzerland participates in them with his knowledge, skills and all his history in this field.”

Bern will now seek to create the international legal basis necessary for the development of a compensation mechanism at a global level.

It would aim to allow frozen funds from the aggressor’s central bank or the assets of its state-owned companies to be legally transferred to the attacked state.

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Thursday’s vote followed lively debate in the upper house of parliament.

There were concerns whether Switzerland’s image of neutrality could be damaged and whether Switzerland was doing enough when there was war in Europe.

Cassis argues that after Russia’s full-scale invasion of Ukraine in February 2022. Switzerland has supported the affected population with about three billion Swiss francs ($3.4 billion).

In addition, the government intends to spend around 1.5 billion Swiss francs on Ukraine and the region in the period 2025-2028. Switzerland also plans to host a peace conference later this year.

“We should not blush when we talk about Ukraine on the international stage,” Kassis said, whether it is on the financial, diplomatic or humanitarian front.

Switzerland’s long-standing position is one of well-armed military neutrality.

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Bern believes that the “peace dividend” has been exhausted

It refuses to send weapons to Kiev or to allow countries that possess Swiss-made weapons to re-export them to Ukraine.

But it joined the European Union’s economic sanctions against Russia.

In May last year, the Ministry of Economy stated that 7.4 billion Swiss francs of the Russian central bank’s reserves and assets are held in Switzerland.

Switzerland also froze 7.5 billion Swiss francs in Russian funds and assets owned or controlled by sanctioned individuals, companies or entities, the ministry said at the time.

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It’s the country long a preferred destination for wealthy Russians and their assets.

The Swiss Bankers Association estimates that in March 2022, Russian clients held approximately 150 billion Swiss francs in banks in Switzerland.