EU member states have reached an agreement that is expected to allow Brussels to transfer the income generated by Russia’s frozen central bank reserves to Kiev, according to the Belgian presidency of the EU Council.
“EU Ambassadors just agreed in principle on a proposal on the use of windfall profits related to immobilised assets to support Ukraine’s reconstruction,” the country's representatives announced in a post on X (formerly Twitter) on Monday.
The Financial Times, meanwhile, has reported that EU envoys had approved a plan aiming to set aside the billions of euros in profits generated by the frozen assets of Russia’s central bank. Some €191 billion ($206 billion) out of €260 billion ($291 billion) of Russia’s immobilized reserves are currently held by Belgium’s Euroclear, a central security depository, generating billions as securities reach maturity and are reinvested.
According to the draft seen by the FT, profits generated by Euroclear will be booked separately with no dividends to be paid to shareholders until members of the bloc unanimously opt to set up a “financial contribution to the [EU] budget that shall be raised on these net profits to support Ukraine.”
The proposed measures are expected to only target future profits and won’t apply retroactively.
Last week, sources close to the discussions told Bloomberg that EU foreign ministers had backed applying a windfall tax on Russia’s frozen assets. At the same time, Reuters reported that the EU was unlikely to confiscate the funds despite G7 plans to discuss the legality of doing so at a meeting in February.
Moscow has repeatedly warned that any actions related to its assets by the US and its allies would amount to “theft,” stressing that seizure of the funds or any similar move would violate international law and undermine reserve currencies, the global financial system, and the world economy.
In April, President Vladimir Putin signed a decree establishing a mechanism to temporarily take over foreign assets in Russia in the event that other countries seize Russian private or government property in their jurisdictions, or threaten the national, energy, or economic security of the country.
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