On February 12, the EU Council voted to establish a future mechanism for the use of income from frozen Russian assets in the EU in favor of Ukraine. The EU Council’s press service reported this.
The Council issued a decision and a resolution outlining the responsibility of central securities depositories that hold assets and reserves of the Central Bank of Russia (CBR) blocked due to sanctions.
Future mechanism for the use of income from frozen Russian assets
“The Council, in particular, decided that central securities depositories holding assets of the Central Bank of Russia in excess of EUR 1 million should separately account for extraordinary cash balances accumulated as a result of EU restrictive measures and separately retain the corresponding income,” according to the press release.
Depositories are unable to dispose of gains from frozen Russian assets independently; nevertheless, supervisory authorities in each nation may make separate decisions on “releasing a share of this net profit” at the depositary’s request.
“This decision paves the way for the Council to decide on the possible creation of a financial contribution to the EU budget from these net profits to support Ukraine and its recovery and reconstruction at a later stage,” the Council of the European Union stated.
Ukrainian Foreign Minister Dmytro Kuleba praised the EU’s decision and called for additional actions to use the frozen Russian assets for Ukraine.
“I welcome the European Council’s decision paving the way for the use of extraordinary revenues from the frozen Russian assets. We encourage further steps to enable their practical use for Ukraine’s benefit. These steps must be ambitious and prompt. Ukraine is ready to continue working with partners on reaching our ultimate goal: making Russian assets available to Ukraine. The aggressor must pay,” the minister wrote.
How has Russia reacted?
Russian foreign ministry spokesperson Maria Zakharova promised “extremely tough” measures in reaction to the potential confiscation of hundreds of billions of dollars in Russian assets.
“This is theft. “This is misappropriation of something that does not belong to you,” Zakharova told the BBC. The spokeswoman did not explain what Moscow would do in retaliation.
“Given that our country has qualified this as theft, we will treat them as thieves,” Zakharova said in a statement.
Confiscation of Russian assets
On November 30, the United States Senate filed legislation to confiscate Russian assets. On January 11, the Biden administration approved the expropriation of Russian assets and their transfer to Ukraine.
Meanwhile, the European Commission intends to use €15 billion from Russia’s frozen assets to provide financial assistance to Ukraine.
At the same time, Russia has estimated that the West could lose assets and investments worth at least $288 billion if it confiscates frozen Russian assets to help rebuild Ukraine and said Moscow would retaliate.
On January 22, EU foreign ministers revealed that they were negotiating a solution to the issue of how to use blocked Russian assets.
On January 23, the Belgian Ambassador to the United States, Jean-Arthur Regibeau, called on Western countries to collectively decide on seizing the frozen Russian assets, most of which are held in the Brussels-based Euroclear settlement center.
On January 24 A US Senate committee adopts legislation to seize Russian assets and transfer them to Ukraine.
On January 30, the Political Affairs Committee of the Parliamentary Assembly of the Council of Europe approved a draft resolution authorizing the expropriation of frozen Russian assets and their transfer to a new fund for Ukraine’s recovery.
Europe has 191 out of 260 billion euros in Russia’s frozen foreign assets, which produced 4.4 billion euros in profit in 2023, and wishes to transfer them to Ukraine.
The G7 and the EU are debating a plan to use the Russian central bank’s frozen assets worth more than $250 billion as collateral to fund Ukraine’s recovery from Russia’s war.