EU takes first step to use profits from Russia’s frozen assets for rebuilding of Ukraine

EU and G7 nations froze some €300 billion (US$323 billion) of Russian central bank assets following Moscow’s invasion of Ukraine
The EU estimates some US$16.17 billion in such profits could be carved out for Ukraine over the next 4 years to finance reconstruction

Russia

Reuters

Published: 4:12am, 13 Feb 2024

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The EU adopted a law to set aside windfall profits made on frozen Russian central bank assets, it said on Monday, in a first concrete step towards the bloc’s aim of using the money to finance the reconstruction of Ukraine.

The EU and the Group of Seven nations (G7) froze some €300 billion (US$323 billion) of Russian central bank assets following Moscow’s invasion of Ukraine. The EU and G7 have been debating if and how these funds can be used for more than a year.

The United States has floated the idea of confiscating the assets outright but EU officials view this as legally too risky.

Two thirds of these funds are in the EU with most of that held by Belgium’s clearing house Euroclear. So far, only taxes on the assets in Belgium have been earmarked to a dedicated fund for Ukraine handled by the Belgian government.

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The law passed on Monday means central securities depositaries (CSDs), such as Euroclear, will be prohibited from using net profits and must keep revenues from the Russian assets separate.

It applies to institutions holding more than €1 million (US$1.1 million) of the Central Bank of Russia’s assets.

“Today’s decision, in line with the G7 position, clarifies … the legal status of the revenues generated by the CSDs in connection with holding of Russian immobilised assets and sets clear rules for the entities holding them,” said the Council of the EU, a legislative body that groups member states.

The EU estimates some €15 billion (US$16.17 billion) in such profits could be carved out for Ukraine over the next 4 years. Separately, the EU has agreed to allocate €50 billion (US$53.89 billion) in aid to Kyiv.

Ukrainian Foreign Minister Dmytro Kuleba. Photo: Ukrinform / dpa

Ukrainian Foreign Minister Dmytro Kuleba welcomed the announcement on X, formerly Twitter.

“We encourage further steps to enable their practical use for Ukraine’s benefit. These steps must be ambitious and prompt,” he said.

The Kremlin did not immediately respond to a request for comment.

Moscow has said that any attempt to use frozen Russian assets as collateral to raise funds for Ukraine would be illegal and lead to years of litigation because Moscow would challenge it.