Russian frozen assets have Australia's Senate fired up

The Australian Senate's Foreign Affairs Committee has proposed 11 measures to strengthen Russia sanctions in a report released on August 20. Among the suggestions is legislation to seize Russian assets and allocate them to Ukraine. Despite 85% of Australia's total sanctions targeting Russia, no one has been prosecuted under these measures, leading the committee to scrutinize its effectiveness.

Identified issues include weak ambition, loopholes, and the perceived lack of enforcement. The report recommends that the Australian government consider legislation to seize sanctioned assets and disburse them to Ukraine. However, the committee notes that the legal process for such seizures is complex and would necessitate new legislation.

The government's foreign ministry states that only 100 million Australian dollars ($72 million) of frozen Russian assets are currently held in the country, a figure the report disputes as potentially underestimated. Euroclear, a financial clearing house based in Belgium, holds approximately 7 billion Australian dollars ($5 billion) in Russian assets, representing 2% of its cash balances.

The Australian report argues that seizing and repurposing Russian assets is justified, but acknowledges that the legal process is challenging. Meanwhile, the Liberal party-led report faced opposition from Labor senators who dismissed the claim of undervalued Russian assets and questioned the significant legal and constitutional barriers.

Australia has already banned imports of Russian oil and petroleum products made in Russia, but permits the import of petroleum products made in third countries using Russian oil, which undermines the impact of sanctions. The report suggests that aligning sanctions with allied countries and addressing the Russian oil loophole could enhance Australia's sanctions effectiveness.