EU leaders have approved plans to use billions of euros from frozen Russian assets to help Ukraine, with the European Commission expected to make legal proposals in early December. It is reported Financial Times.
Western sanctions have frozen $300 billion of the Russian central bank since the start of the full-scale invasion of Ukraine. The lion's share of these funds - 180 billion euros, according to the Belgian government - is kept in the world's largest securities depository, Euroclear, headquartered in Brussels.
Euroclear said on Thursday it had made about 3 billion euros on frozen Russian assets in the first nine months of this year alone, compared with 347 million euros for the same period in 2022, with the increase driven by rising interest rates.
Coupon payments and bond repayments on frozen Russian assets are stuck at Euroclear because they cannot be paid to customers under sanctions. The securities depository regularly reinvests such cash balances, and rising interest rates mean that Euroclear earns more from these investments.
EU officials are looking for ways to channel those proceeds to Ukraine, but the European Central Bank has warned of potential risks to the euro from access to those proceeds, warning that it could prompt other central banks to divest their euro-denominated assets and weaken currency
But leaders meeting at a summit on Friday welcomed the move, calling on the European Commission to "accelerate work with a view to presenting proposals".
"Resolute progress is needed in coordination with partners on how any private income derived directly from frozen Russian assets could be directed to support Ukraine and its recovery and reconstruction, consistent with applicable treaty obligations, as well as EU legislation and international law. The European Council calls on the High Representative and the Commission to speed up work in order to submit proposals", - it is stated in the decision of the summit.
The commission plans to present proposals in early December, two senior officials involved in their preparation told the Financial Times.
"These conclusions are a green light for us", - said one of them.
Brussels is in regular contact with London and Washington to ensure their approaches are synchronized, the officials added.
Some EU member states, such as Germany, have previously been skeptical of the plans due to legal issues surrounding ownership of the funds. Those fears were allayed earlier this month when US Treasury Secretary Janet Yellen backed the idea of skimming the windfall. The Group of Seven also supported these plans.
The European Commission's December proposals are expected to clarify legal obligations regarding windfalls in securities depositories, such as. Only at the next stage, expected next year, legislation will be presented that will allow the actual withdrawal and redistribution of these funds in favor of Kyiv.
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