EU adjacent to agreement on utilizing Russian assets for Ukraine
Date
4/24/2024 3:21:14 AM
(MENAFN) Belgian Finance Minister Vincent Van Peteghem has disclosed that the European Union (EU) is nearing a significant Political agreement regarding the utilization of profits generated by Russia's frozen central bank reserves, which have been subject to sanctions linked to the conflict in Ukraine. This development comes as European Union nations deliberate on how best to leverage these assets to support Ukraine's defense efforts in the face of ongoing hostilities with Russia.
Since the commencement of hostilities in February 2022, Western powers have immobilized approximately USD300 billion in assets belonging to the Russian central bank. A substantial portion of these funds, around USD280 billion, is held within the European Union, primarily managed through institutions like Belgium-based Euroclear. Moscow has vehemently criticized this action, condemning it as "theft" and a violation of international norms.
While calls from the United States and United Kingdom for the outright seizure of these funds have been made, reports suggest that European Union member states are approaching the matter with caution. Concerns over the legal implications of such a drastic measure, coupled with fears of potential retaliatory actions from Russia, have prompted a more measured approach among European Union countries.
One proposed solution under consideration involves implementing a windfall tax on the profits generated by the frozen assets. According to Eurostat data, these reserves generated EUR4.4 billion (USD4.7 billion) in interest income in 2023 alone. Projections indicate that by 2027, after-tax profits could amount to EUR15-20 billion (USD16-21 billion).
In March, European Union's top diplomat, Josep Borrell, floated a plan to allocate 90 percent of these profits to the European Peace Facility, intended for the procurement of arms to bolster Ukraine's defense capabilities. The remaining funds would be channeled into European Union budgets to support Ukraine's defense industry.
Peteghem has signaled that European Union nations are on the verge of reaching consensus on this proposal. The minister indicated that the first tax collection could be implemented as early as July 1, marking a significant step forward in the European Union's efforts to utilize frozen Russian assets to support Ukraine amid the ongoing conflict with Russia.
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