The Russian embassy to Ireland has warned that the "Western economy" risks collapse should the EU press ahead with plans to convert tens of billions of frozen Russian assets into a loan for Ukraine.
In a statement, the embassy said the EU would lose its reputation as a safe haven for financial assets and that any seizure of Russian central bank assets - which have been frozen since Russia's full-scale invasion of Ukraine in 2022 - would destroy the credibility of the EU financial sector and the single currency, and would bring about a capital flow from "Western markets."
"All that creates a risk of collapse of the Western economy in general, which heavily depends on the debt accumulation, domination in international financial markets, sanctions and unfair competition," the statement said.
There are various estimates of the scale of frozen Russian assets, but they generally are thought to amount to up to €300 billion.
EU member states are examining a proposal to use up to €140 billion of the assets to provide a loan to Ukraine. Under the scheme, the loan would only be repaid by Ukraine once Russia started paying reparations for its invasion.
This follows indications that US President Donald Trump intends to taper off military support for Ukraine, with the burden falling on the EU to purchase the weapons that would be provided by the United States.
It also follows an assessment by the UN, World Bank, Ukraine and the European Commission that the cost of rebuilding Ukraine now amounts to $524 billion.
EU leaders are expected to discuss the proposal at a summit in Brussels next week.
Belgium has long expressed reservations about the reparations loan plan as some €194 billion of the frozen Russian assets are held in the Belgian-based securities and deposits company Euroclear.
The Belgian government wants to ensure that any liabilities from the reparations loan - should Russia take legal action - be shared by member states.
In the statement, the Russian embassy said any attempt to seize the assets would be "legally null and void under international and contract law."
It added: "We will act in accordance with the principle of reciprocity in international relations and respond in kind. The unfriendly actions will get a due response which is going to hurt. Russia possesses a wide range of countermeasures and capabilities to compensate for the resulting damages."
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The statement, issued by Nikita Isakin, the embassy’s third secretary, said Russia would not pay any reparations, and that the move would "only prolong [the] agony" of the "Kiev regime".
The statement concluded: "Accordingly, it will be the EU which in the final analysis will bear the full responsibility – including criminal one – for the consequences of the possible confiscation of our assets and will have to foot the bill for all loans given to Kiev."
