European Union leaders have endorsed proposals to use billions of euros from frozen Russian assets to help rebuild Ukraine. The European Commission is expected to put forward formal legal proposals in early December, according to the summit conclusions.
“Russia is responsible for the massive damage caused by its war of aggression against Ukraine. Decisive progress is needed, in coordination with partners, on how any extraordinary revenues held by private entities stemming directly from Russia’s immobilized assets could be directed to support Ukraine and its recovery and reconstruction, consistent with applicable contractual obligations, and in accordance with EU and international law,” EU council conclusion reads.
Western sanctions have immobilized 300 billion dollars belonging to Russia’s central bank since it invaded Ukraine. The lion’s share of those funds – 180 billion euros by Belgian government estimates – is held at Euroclear, the world’s largest securities depository based in Brussels.
US to transfer seized Russian assets to Ukraine for the first time
On 27 October, Euroclear said it had generated around 3 billion euros from the frozen Russian assets in just the first nine months of this year, versus 347 million euros over the same period in 2022. The increase is driven by rising interest rates.
Coupon payments and bond redemptions on the frozen Russian assets are stuck at Euroclear, as they cannot be paid out to sanctioned clients. The securities depository regularly reinvests these leftover monies, and higher interest rates mean Euroclear earns more on these investments.
EU officials are looking for ways to direct the revenues to Ukraine, but the European Central Bank has warned of potential risks to the euro if access to the proceeds prompts other central banks to ditch their euro-denominated assets, weakening the currency.
The Commission plans to put forward proposals in early December, Financial Times reported, citing two senior officials involved in the preparations.
Brussels has been in regular contact with London and Washington to ensure a synchronized approach, the officials added.
Earlier, US Treasury Secretary Janet Yellen backed European proposals to use profits generated by Russian assets frozen to help Ukraine, Financial Times reported. Yellen said she supports “harnessing windfall proceeds from Russian sovereign assets immobilized in particular clearinghouses and using the funds to support Ukraine.”
