EU decides not to transfer €5bn profit from frozen Russian assets to Ukraine
Brussels will need this money to pay for lawsuits filed by Russia
The European Union will not transfer €5 billion in profits from the investment of frozen Russian assets to Ukraine in 2022-2023. The money will remain with the Brussels-based securities depository Euroclear as insurance against lawsuits from Moscow.
Source. Politico writes about this with reference to a written response from Euroclear.
"Profits for 2022-2023 related to Russian frozen assets are separate from profits earned in the "ordinary course of business". We are not distributing these profits to shareholders and are retaining them until further notice. These funds will be used to cover the costs, risks and losses incurred by central securities depositories due to the war in Ukraine," Euroclear explained.
Ukrainian Justice Minister Denys Malyuska disagrees with this argumentation, stressing that €5 billion is an exorbitant amount for insurance against lawsuits. He also noted that Euroclear suffered direct losses of only €34 million due to the war in Ukraine. At the same time, legal experts warn that the retroactive confiscation of Russian profits would be a "legal minefield".
According to the European Commission's plans, only income from the frozen funds of the Russian central bank, net of taxes, received after 15 February 2024, can be used to help Ukraine.
90% of this amount is to be used through the European Peace Fund to purchase weapons for Kyiv, and the remaining 10% is to be used to rebuild Ukraine. This scheme still needs to be unanimously approved by all EU countries, but a final consensus has not yet been reached in the EU.
Politico, citing a Belgian government source, reports that as of February, Russia had already filed 94 lawsuits against Euroclear, which operates under Belgian law, seeking the return of frozen funds from the Russian central bank.
Background. Just a few days ago, it was reported that the European Commission was proposing to send Ukraine about €3bn in proceeds from frozen Russian assets.
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