EU Proposes Mechanism to Utilize Profits from Frozen Russian Assets for Ukraine

by Cheplyk Roman
Tuesday, March 19, 2024
EU Proposes Mechanism to Utilize Profits from Frozen Russian Assets for Ukraine

The European Union has developed a novel approach to aid Ukraine, with Bloomberg reporting that proposals have been set forth to direct profits from frozen Russian assets towards Ukraine as early as July

The initiative involves imposing a tax on the profits generated from these frozen reserves, aiming to allocate approximately €3 billion annually to support Ukraine's weapon supplies and bolster its defense industry.

This financial strategy targets the substantial €260 billion in assets of the Russian Central Bank, primarily consisting of securities and cash, which have been frozen by the G7 countries, the EU, and Australia. A significant portion of these assets, over two-thirds, is held within the EU.

The move comes at a critical time as Ukraine grapples with an artillery shortage, compounded by the stagnation of about $60 billion in aid from the US due to Congressional deadlock. The Biden administration is advocating for G7 allies to leverage the frozen Russian assets, aiming for tangible progress before the G7 leaders' summit in June. However, there is resistance from some European countries, including Germany and France, as well as from the European Central Bank, regarding the release of these assets.

Under the EU's proposals, the specifics of how much revenue since February 15 will be transferred to the EU, and the frequency of these transfers, remain undecided. The initial allocations are intended for the European Peace Fund and the "Ukraine" fund within the EU budget, with a segment of the profits reserved in central depositories to cover the costs of asset management and potential risks.

These proposals are set for discussion among EU leaders at their upcoming meeting in Brussels later this week, marking a significant step in the international community's efforts to support Ukraine amidst ongoing conflicts.

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