Russian funds frozen: EU proposed confiscation of 15 billion euros to go to the reconstruction of Ukraine

The European Council agreed Monday on a set of new measures targeting profits from frozen assets belonging to Russia’s Central Bank, paving the way for the proceeds to eventually be redirected to Ukraine, according to Kyiv Independent.

An unexploded bomb in front of a destroyed building in Mariupol, UkrainePhoto: STRINGER / AFP / Profimedia

Western countries froze about $300 billion of Russian Central Bank assets at the start of the full-scale invasion. Since then, Washington, Brussels and Kiev have discussed legal ways to channel these funds to aid Ukraine’s reconstruction efforts, but have yet to come to a definitive conclusion.

The Group of Seven (G7) nations have pledged to freeze Russian assets under their jurisdictions until Moscow pays war reparations to Ukraine.

The EU thus proposed on Monday a plan to confiscate around 15 billion euros ($16.2 billion) of the expected profits generated by the frozen assets of Russia’s Central Bank and transfer them to Ukraine.

The European Commission estimated that the plan would generate about 3 billion euros ($3.2 billion) annually, or 15 billion over the period 2023-2027.

The plan would have the most direct impact on Euroclear, a Belgium-based financial services company that holds about 191 billion euros ($205 billion) in Russian assets.

The European Council said on Monday that central securities depositories (CSDs) holding more than 1 million euros ($1.07 million) in assets from Russia’s Central Bank must separate any profits generated by the primary accounts.

Income must be isolated and monitored and cannot be assigned.

The decision is the next step that could allow some of the frozen Russian assets to eventually be redirected to help pay for Ukraine’s reconstruction, the European Council said.

The funds could be channeled through the EU budget in the future.

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