EU MOVES TO SPEND €27BN IN PROFIT FROM FROZEN RUSSIAN ASSETS FOR UKRAINE
FROZEN RUSSIAN ASSETS FOR UKRAINE
The European
Union is pressing ahead with a plan to use the profits generated from billions
of euros of Russian assets frozen in Europe to help provide weapons and other
funds for Ukraine, a senior official said Tuesday
Officials
could put forward the proposal before meeting of prime ministers in Brussels
next week.
EU leaders
are to take a significant step towards confiscating a potential €27bn in profit
generated over the next four years by Russian state assets frozen in Europe to
help fund the war effort in Ukraine.
Officials at
the European Commission are poised to put forward what they believe is a
legally robust proposal to be considered by member states, possibly before a
meeting of prime ministers in Brussels next Thursday.
About $300bn
belonging to the Russian central bank has been frozen in the west, largely in
foreign currency, gold and government bonds. About 70% of these are held in the
Belgian central securities depository Euroclear, which is holding the equivalent
of €190bn.
This year
they are expected to generate between €2bn and €3bn in profits, depending on
potential interest rate changes – money that could then go straight to Ukraine.
While
officials are hopeful of an agreement on seizing the profits, they do not
expect a deal yet on how the money should be used, because some states are
against using it to fund Ukraine’s military, preferring that the cash be spent
on reconstruction and humanitarian efforts.
Ireland, for
example, is bound by neutrality through long standing foreign policy, but it
contributes funds to Ukraine on condition that the money is spent on
“non-lethal” purposes such as clearing landmines.
Sources say
the European Commission will not offer options at this time in relation to the
use of the money. “It means they can agree in principle to use the revenues of
profits but then have a further discussion on where that money can go
constitutionally for every member state,” one source said.
“The process
has gathered momentum and we expect the wheels will move very quickly on this
once the decision is made.”
Last month
EU leaders agreed that the proceeds could be held in a separate account,
clearing the war for “step B”, which would be a decision that this money could
be confiscated and sent to Ukraine.
The
communique drafted by ambassadors for prime ministers’ approval next week is
sufficiently vague. “The European Council reviewed progress on the next
concrete steps towards directing extraordinary revenues stemming from Russia’s
immobilised assets for the benefits of Ukraine including the funding of
military support,” it states
It is
expected that some of the money will be retained in the EU as part of a defence
fund against expected Russian legal retaliation in the long term.
Any
agreement will put pressure on the British government to follow suit. The
Russian central bank holds £26bn in the UK, and the foreign secretary, David
Cameron, has joined the Ukrainian president, Volodymyr Zelenskiy, in calling
for the money to be seized and handed to Kyiv.
However, the
idea is being resisted by financial institutions, who fear it could undermine
trust in the City of London.
The move is
likely to be met with retaliation in Moscow before and after the end of the
war, and officials think some of the money should be held in Euroclear as a
defence buffer for any future court costs.
“We need a
significant amount in Euroclear … because Euroclear will face a lot of claims,”
the official said.
Russian
courts do not recognise western sanctions and could move to seize €33bn in
Euroclear’s assets held in national securities in Moscow.
This week
the Swiss parliament voted in favour of allowing some of the €8bn Russian
assets it had on deposit to be used for reparations for damage caused by an
aggressor.
There has
been concern that such a move would jeopardise Switzerland’s longstanding
position of well-armed military neutrality.
According to
Agence France-Presse, its foreign minister, Ignazio Cassis, said: “We don’t
have to blush when we talk about Ukraine on the international stage.”
The world
patiently awaits the final decision of the European Union. The retaliation
moves by Russia are also germane and need to be considered. Whether the EU
action is Legal, Moral or Expedient depends on which side you are standing on.
What do you
think?
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