EU seeks to raise 15B euros for Ukraine from Russia’s frozen assets

Brussels will propose on December 12 to ringfence profits generated from Russia’s frozen assets in the EU, aiming to eventually skim off up to 15 billion euros for Ukraine’s benefit, reported from the Financial Times.

The European Commission plan had been delayed since the summer after several EU member states and the European Central Bank raised legal and financial concerns.

But the faltering US and EU efforts to agree additional financial support for Ukraine has given fresh impetus to the proposals to tap profits from Moscow’s immobilized cash, said people familiar with the discussion.

To win over sceptics, the commission will initially require central securities depositories holding Russian central bank assets to place the profits generated from them in separate accounts, according to people briefed on the proposal. Securities depositories generate profits by reinvesting cash from matured securities such as government bonds, as payments to Moscow are banned due to the sanctions.

EU member states would need to unanimously back the plan, as well as further implementing steps, before the money could be disbursed to Kyiv. Hungary has separately blocked further EU funding for Ukraine ahead of a leaders’ summit on Thursday.

In the second stage of the plan, the profits would be moved to the EU’s common budget to help support Ukraine, the people said.

Only proceeds from Russia’s central bank assets would be targeted under the proposal. The commission estimates this would generate up to 3 billion euros a year, or 15 billion euros between 2023 and 2027, though officials warned that the amount would depend on interest rates through the period.

The measures would principally affect Euroclear, a Belgium-based depository that holds about 191 billion euros in Russian sovereign assets, the largest share immobilized in the west.

Euroclear is already separating profits voluntarily, and earned 3 billion euros in income on all Russian assets in the first nine months of this year alone. Not all those profits were generated from Russian central bank assets.

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