On Tuesday, Brussels will propose to isolate profits from Russian assets frozen in the EU, with the intention of raising up to 15 billion euros for the benefit of Ukraine, according to an article published in Tuesday’s edition of the Financial Times. , adopted by Agerpres.

The initial plan by the Community’s executive had to be delayed for several months after several member states and the European Central Bank raised a number of legal and financial objections.

But the failure of new US and EU efforts to provide new financial support to Ukraine has given new impetus to proposals aimed at using money from frozen Russian assets in the EU, sources close to the discussions told the FT.

“It is important to look at how we can use Russian fixed assets and the income generated from these fixed assets to support Ukraine,” European Commission Vice President Valdis Dombrovskis told the Financial Times.

The EU seized Russian assets worth about 230 billion

Noting that the G7 countries had agreed to freeze assets until Moscow paid for the damages inflicted on Ukraine, Dombrovskis argued that it was time to consider how best to use the profits generated in the meantime from these immobilized assets.

The 27 member states of the European Union have frozen assets worth €200 billion belonging to Russia’s Central Bank, as well as private assets worth €30 billion belonging to Russian oligarchs, as a result of Moscow’s decision to invade Ukraine in February 2022. .

To convince skeptics, the European Commission will first ask central depositories that hold the assets of the Central Bank of Russia to place the profits received from those assets in separate accounts, sources cited by the Financial Times said. At the second stage of the plan, the profit will be transferred to the common budget of the EU to support Ukraine.

According to the plan of Brussels, only the sums received from the assets of the Central Bank of Russia, frozen in the EU, will be targeted. The Commission estimates these assets could generate between €3 billion and €15 billion a year between 2023 and 2027, but officials warned that the final amount would depend on how interest rates change during that period.

This plan needs unanimity in the EU

Many of these assets are in the clearing house of Euroclear Ltd., where they received almost three billion euros in income in the first nine months of this year.

But EU member states must unanimously approve the plan, as well as the next implementation steps, before the money can be sent to Kyiv. Hungary has announced it will block new European funds for Ukraine ahead of Thursday’s European summit.

Despite the limited purpose of the proposal, which is aimed only at making a profit and not at the frozen assets themselves, experts are sounding the alarm about the legal and financial risks. Given the systemic importance of Euroclear, which held 35.6 trillion euros in assets in 2022, “this will certainly trigger uncertainty and fear with an immediate impact on financial markets,” said Armin Steinbach, professor of law and economics at HEC Paris.

The European Central Bank also warned that the use of interest earned on Russian assets could encourage holders of foreign exchange reserves to turn away from the euro. Another risk is that Russia will respond by seizing Russian assets of Western companies, as Russian Finance Minister Anton Siluanov has long threatened.

The European Commission is aware of these risks and offers to allocate a certain part of funds for risk management, according to sources cited by the Financial Times.