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Tuesday, December 3, 2024

EU Readies Billions from Frozen Russian Assets for Ukraine

European accounts holding frozen Russian assets are producing substantial interest payments, potentially offering financial support for the reconstruction of Ukraine’s war-ravaged economy. Following Russia’s invasion of Ukraine in February 2022, Western nations froze a significant portion of Moscow’s foreign reserves, totaling around โ‚ฌ300 billion ($327 billion). Approximately โ‚ฌ200 billion ($218 billion) of these funds are situated in the European Union, primarily within Euroclear, a financial institution safeguarding assets for banks, exchanges, and investors.

On Thursday, EU leaders approved a vital $50 billion funding package for Ukraine and moved closer to finalizing a strategy to utilize the accumulating profits in Euroclear’s accounts. In a summit statement, EU leaders acknowledged the potential for generating revenues from the immobilized Central Bank of Russia assets held by private entities.

Euroclear, based in Belgium, revealed that it had earned โ‚ฌ5.2 billion ($5.6 billion) in interest from sanctioned Russian assets since the EU and Group of Seven countries froze them in 2022. The EU and its allies are committed to making Russia contribute to the substantial costs of rebuilding Ukraine, estimated by the World Bank at $411 billion over the next decade.

Also Read: Ukraine Reports Destruction of Russian Warship Near Crimea

One proposal involves imposing a special levy to collect the windfall interest income, directing it to the EU budget for Ukraine’s reconstruction. However, legal and financial concerns have delayed this plan, with some EU member states and the European Central Bank apprehensive about potential violations of international law and the impact on the euro’s credibility.

EU member countries have tentatively agreed to tap into the windfall interest income, but the practical details are still under discussion. Lawyers are refining the agreement’s text before submitting it for final approval by EU member states.

In its earnings statement, Euroclear, responsible for settling cross-border trades and safeguarding over $40 trillion in assets, emphasized its focus on minimizing legal and operational risks associated with proposals to allocate the funds to Ukraine. The company highlighted administrative costs related to sanctions, amounting to โ‚ฌ62 million ($67 million) last year, and clarified that it continues to retain profits from the blocked Russian assets pending further guidance on their distribution or management.

John Collins
John Collins
John is an esteemed journalist and author renowned for their incisive reporting and deep insights into global affairs. As a prominent contributor to City Telegraph, John brings over 5 years of experience covering diverse geopolitical landscapes, from the corridors of power in major capitals to the frontlines of conflict zones.

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