EU to channel frozen Russian assets for Ukraine's reconstruction: Report
European Union
In a significant move towards supporting Ukraine's recovery efforts, the European Union (EU) has enacted legislation aimed at allocating windfall profits from frozen Russian central bank assets for the reconstruction of Ukraine, the EU announced on Monday.
This decision marks a pivotal moment in the EU's efforts to utilise funds accrued from sanctions imposed on Russia following its invasion of Ukraine.
Since the invasion, both the EU and the Group of Seven nations (G7) have collectively frozen around 300 billion euros ($323 billion) of Russian central bank assets.
Deliberations on the utilisation of these funds have persisted for over a year, with the United States proposing outright confiscation.
However, EU officials have deemed this approach legally precarious.
The majority of the frozen assets, approximately two-thirds, are held within the EU, with a significant portion managed by Belgium's Euroclear.
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Until now, only taxes on these assets in Belgium have been directed towards a dedicated fund for Ukraine, overseen by the Belgian government.
Under the newly passed law, central securities depositaries (CSDs) like Euroclear will be mandated to segregate net profits and revenues from Russian assets, ensuring they are kept separate from other financial activities.
This regulation applies to institutions holding over 1 million euros ($1.1 million) of the Central Bank of Russia’s assets, providing clarity on the legal framework surrounding the utilisation of these funds.
The EU estimates that approximately 15 billion euros ($16.17 billion) in profits could be allocated for Ukraine's benefit over the next four years from these assets.
Additionally, the EU has committed to providing 50 billion euros ($53.89 billion) in aid to Kyiv.
Ukrainian Foreign Minister Dmytro Kuleba expressed appreciation for the EU's decision.
He urged ambitious and prompt actions in this regard.
Meanwhile, the Kremlin has yet to respond to the EU's move.
Moscow has previously stated that any attempt to use frozen Russian assets for Ukraine would be deemed illegal and subject to prolonged litigation, asserting that they would challenge such measures.
(With inputs from Reuters)