Key facts
- An Australian Senate committee proposed new legislation to seize frozen Russian assets for Ukraine.
- The committee cited shortcomings in Australia's sanctions regime, including loopholes and lack of enforcement.
- A submission suggests Australian-dollar-denominated Russian assets held via Euroclear could be worth approximately A$7 billion, challenging the foreign ministry's estimate of less than A$100 million.
- Dissenting senators dismissed the higher asset valuation as speculation and raised legal and constitutional barriers to seizure.
- The report also recommended making financing Russia's military operations a crime with asset forfeiture.
- Other proposals include aligning Australian sanctions with allied nations and addressing loopholes in oil import bans.
An Australian Senate committee has put forward 11 proposals to strengthen Russia sanctions, including legislation to seize Russian assets and transfer them to Ukraine. The committee's report highlights perceived shortcomings in Australia's current sanctions regime, such as a lack of ambition, loopholes, and insufficient enforcement, prompting a thorough review.
The report recommends that the Australian government consider legislation for the seizure and disbursement of Russian sanctioned entity assets to Ukraine. While Australia's foreign ministry (DFAT) estimates less than A$100 million ($72 million) in frozen Russian assets, a submission cited by the report from sanctions academic Anton Moiseienko challenges this figure. This submission suggests that 2% of Euroclear's 'cash balances relating to Russia sanctions' are Australian-dollar-denominated, which would equate to approximately A$7 billion ($5 billion). Euroclear, a Belgian financial clearing house, holds a significant amount of Russian assets and has been central to discussions on asset expropriation in the EU.
The report argues for the strong case for seizing and repurposing Russian assets but acknowledges the legal complexities and the necessity of new legislation. Australian foreign ministry representatives informed the committee that current Australian sanctions law only permits assets to be frozen. The report's authors further propose making the financing of Russia's military operations a criminal offense, punishable by asset forfeiture.
However, senators from Australia's governing Labor party dissented from the Liberal party-led report. They dismissed the claim of undervalued Russian assets as mere 'speculation' and pointed to significant legal and constitutional barriers to asset seizure. These senators also suggested that utilizing the interest accrued on frozen Russian assets in Euroclear to secure loans for Ukraine could be an alternative to outright seizure.
Meanwhile, the European Commission is expected to reconsider the issue of seizing Russian assets, with Belgium's foreign minister indicating a potential path forward. Among other recommendations, the Senate committee proposed aligning Australian sanctions with those of allied countries and imposing further sanctions on Russian oil. Australia has already banned imports of Russian oil and petroleum products, but not those derived from Russian oil and produced in third countries, a loophole that has allowed imports from India, for example. Civil society group B4Ukraine has labeled Australia an 'international outlier' for permitting such imports, which have been banned by the EU and UK. A U.S. Senate bill also aims to increase alignment with EU and UK sanctions against Russia.