Table of Contents

• EDITOR’S RAMBLE 🗣

• FEATURED REPORT 📰

• TOGETHER WITH BARBRI SQE* 🤝

• IN OTHER NEWS 🗞

• AROUND THE WEB 🌐

• STUFF THAT MIGHT HELP YOU 👌

EDITOR’S RAMBLE 🗣

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FEATURED REPORT 📰

🤫 Using Russian assets to help Ukraine (legally)

What's going on here?

US and European leaders are struggling to structure a €45 billion loan for Ukraine. The money’s planned to be taken from frozen assets belonging to Russia’s central bank (the assets are generating billions of Euros in interest). But the plan comes with challenges that are hard to overcome. 

What will the loan to Ukraine be used for? 

The proposal (named the Ukraine Loan Cooperative Mechanism) will support Ukraine's war, focusing on buying weapons and repairing energy infrastructure.  

Russian attacks on Ukrainian power plants have increased – last month Ukraine's power production was down to a third of what it was before the war. Power is crucial for both the military and for ensuring the comfort of Ukrainian citizens. 

Where would the money coming from? 

After Russia’s full-scale invasion of Ukraine in February 2022, the EU banned transactions involving Russia’s Central Bank assets. Similar to other central banks, Russia stored some reserves in things like currencies, gold, and government bonds, with around a third held in EU banks – and these assets keep earning interest over time. Euroclear (a Belgian company that keeps financial instruments safe for banks) holds 75% of the frozen Russian assets – these assets have earned €159 billion since being frozen. 

Also, in May 2024, the EU made a rule that banks holding more than €1 million in Russian assets must send profits from those assets to the European Fund for Ukraine (a fund supporting Ukraine's war effort). 

Is it legal for the EU to do this? 

Say you put £100 in a savings account with an interest rate of 3%. At the end of the year you’ll have £103. The £100 is your "principal" and the £3 is the “interest” that you earned.   

The distinction between principal and interest is important in this case too.  

The principal is the Russian assets held by various EU banks. The interest is the money earned from the principal over time – this goes into a separate account owned by a European bank.   

It’s not clear whether taking the principal (by transferring ownership from the Russian Central Bank to the EU or G7) is legal. The US thinks it's okay under international law, but countries like France and Germany are unsure. 

But the interest earned can be taken. This works because the income is earned in Europe, so the EU can legally apply a 100% tax on it. Then, the EU can collect the money and send it to Ukraine to help repay EU loans. 

What are the challenges with this plan? 

There are some major challenges that still have to be overcome before the frozen Russian assets can be used to financially help Ukraine. 

• Conflicting legal codes: The main challenge is the different legal rules between the 27 EU countries (where most of the assets are held) and the US. EU laws require sanctions to be reconsidered and renewed every six months. That means, theoretically, the amount of assets that remain frozen could change every six months. If the assets are reduced, then the interest they earn will probably fall too, making it hard to base a long-term loan on them. There are potential solutions to this. For instance, the EU could freeze the assets for five years, or extend sanction renewals to every 36 months. But these changes would probably need unanimous agreement from all 27 EU countries, which could be difficult to get (because, for example, Hungary has close ties to Russia). 

• Fluctuations in interest rates: The frozen Russian central bank assets are earning about €3 billion in interest each year right now. But global interest rates are falling at the moment. So, that figure will probably go down. This makes the loan riskier as it’s not certain how much money will be generated from the frozen assets down the line to be sent to Ukraine – and this money is what’s needed to repay the loan. 

• Ukraine’s impatience: Ukraine has shown frustration with how slowly these issues are being resolved. The inability to unlock access these funds, despite promises, highlights how politically difficult it is to create a solution that requires coordination across multiple countries and legal systems. Ukrainian President Volodymyr Zelenskyy said “relevant discussions have been going on for too long, and finally solutions are needed.” 

What are the next steps? 

For the loan to take effect, it must be approved by a majority (not all) of the 27 EU countries and the European Parliament by the end of the year. As it just needs a majority, it means no single country can block the plan. 

What’s the big picture effect? 

This scenario highlights how a mismatch in how sanctions are treated can stop individual states achieving a common goal (like supporting Ukraine). So, as a result, this may be a good moment to negotiate international law (or at least an agreement between the EU and the US) to align on areas related to sanctions and government loans. This would avoid a fragmented legal environment stalling the process like it is now.  

TOGETHER WITH BARBRI SQE* 🤝

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IN OTHER NEWS 🗞

• 🥊 Cards Against Humanity (yes, the game) filed a $15 million lawsuit against SpaceX for trespassing on property the company owns. The lawsuit, filed on Thursday, accuses SpaceX employees of trespassing and damaging land near the US-Mexico border that Cards Against Humanity purchased in 2017. The card game bought the land as a publicity stunt, using more than $2 million in donations to protect the area where former President Donald Trump planned to build a wall. SpaceX contractors had removed vegetation and placed gravel over soil to make the space available for SpaceX vehicles to park and work on. In an Instagram post on Friday, Cards Against Humanity said that Elon Musk “snuck up on us from behind and completely f***ed that land with gravel, tractors, and space garbage”.

• 👏 Paul Weiss is providing every London vacation schemer with free accommodation, travel, and a workwear budget. The London office of US law firm Paul Weiss is offering what may be the most generous support package available for vacation scheme students. The standout feature is a £250 ‘professional attire grant’ which allows students to purchase clothes for their time at the firm’s Soho office. The firm will also arrange and cover the cost of accommodation, pay for travel to and from the scheme, and provide free breakfast and lunch from Monday to Thursday, alongside paying a market leading salary of £1,500.

• ❌ Freshfields has dropped the “Bruckhaus Deringer” from its name in US-focused rebrand. Its current name came from the merger of three firms in 2000 – the Freshfields (from London), Deringer Tessin Herrmann & Sedemund (from Germany) and Bruckhaus Westrick Heller Löber (from Austria). The firm’s aware that “no one ever says the 'Bruckhaus Deringer' bit” says senior partner Georgia Dawson.

• 💻 Google gets a win against an EU fine (for once!) The €1.49 billion fine was initially given to them for allegedly blocking rivals from displaying ads between 2006 and 2016. But Google (represented by Slaughter and May) successfully argued that the European Commission - which levied the fine - “committed errors in its assessment”. The Commission says it might still appeal this decision.

AROUND THE WEB 🌐

• 🌤️ Fun: Find out the weather on the day you were born

• 🌍️ Travel: Watch travel vlogs pinned to their real-world locations (think Google Maps meets YouTube)

• 🎲 Useless: Add to this wall of one million emojis

Credit: r/internetisbeautiful

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STUFF THAT MIGHT HELP YOU 👌

• 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.