EU envoys agree to use profits from frozen Russian assets for Ukraine

European Union ambassadors have agreed on a law to use windfall profits generated from Russian central bank assets frozen in the bloc for Ukraine's defence, Belgium said in a post on X on Wednesday.

European Union ambassadors have agreed on a law to use windfall profits generated from Russian central bank assets frozen in the bloc for Ukraine's defence, Belgium said in a post on X on Wednesday. European ministers still need to approve the text that will see 90% of the proceeds go into an EU-run fund for military aid for Ukraine, with the other 10% going to support Kyiv in other ways, four EU diplomatic sources said.

The Group of Seven countries (G7) froze some $300 billion worth of Russian financial assets soon after Moscow's invasion of Ukraine in 2022. Since then, the EU and other G7 countries have fiercely debated how and whether to use the funds to help Ukraine. "The money will serve to support ... Ukraine's recovery and military defence in the context of the Russian aggression," Belgium, which holds the EU presidency until the end of June, said in the post on X.

The U.S. has repeatedly proposed seizing the assets in their entirety, but Europe has balked at the idea, citing risks to the euro and massive legal repercussions. More recently, Washington has pushed for using the assets as collateral to provide loans for Ukraine. In late April, Russian officials threatened the West with a "severe" response and "endless" legal challenges if the assets are touched.

"There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live," European Commission President Ursula von der Leyen posted on X. EUROCLEAR

Earlier this year, EU leaders agreed to ring-fence the windfall profits for Ukraine, estimating the move will add up to between 15 billion and 20 billion euros ($37.63 billion) by 2027. That includes around 3 billion euros ($3.22 billion) this year, the first 1 billion of which could be disbursed as soon as July, von der Leyen previously said. The assets have been gaining exceptional interest because they are stuck, resulting in these so-called windfall profits.

Belgium's securities settlement house Euroclear handles the bulk of the assets immobilised in the EU. Three of the sources, who spoke on condition of anonymity, said Euroclear's management fee was reduced to 0.3% from 3% to free up more cash for Ukraine. A spokesperson for Euroclear declined to comment about the agreement and the management fee reduction.

At the end of the first quarter of 2024, Euroclear Bank's balance sheet totalled 199 billion euros, of which 159 billion euros ($170.86 billion) related to the Russian assets, it said in its first-quarter results. Belgium is separately collecting tax from Euroclear - buoyed by the assets - which is set aside for Ukraine. For the fiscal year 2024, Belgium expects to receive 1.7 billion euros ($1.83 billion), with the bulk already allocated for Ukraine's military.

Euroclear said it made 1.6 billion euros in interest from the assets in the first quarter, of which nearly 400 million euros was tax for Belgium. ($1 = 0.9305 euros)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)