Belgium-based clearinghouse Euroclear, which holds the bulk of Russia’s frozen assets frozen by the West, has warned it does not want to be held liable if the EU confiscates the funds and hands them over to Ukraine.
Euroclear froze an estimated €197 billion ($213 billion) in assets belonging to the Russian central bank as part of Ukraine-related sanctions ordered by the EU. The frozen assets generated €5.15 billion in interest in the first three quarters of this fiscal year.
Earlier this year, the EU decided to give Ukraine a chunk of that interest but stopped short of tapping the assets themselves. The move prompted renewed Russian accusations of theft perpetrated by the West.
Euroclear CEO Valerie Urbain told Bloomberg on Tuesday that any plan to seize Moscow's assets should also transfer all of the liabilities.
“We cannot be in the situation whereby the assets have been seized, but, in a couple of years, Russia comes and knocks at the door and says, ‘I want to recoup my securities,’ while the securities assets would have been gone,” she said. “If there is a confiscation of assets, everything should move, liabilities included.”
Euroclear recently revealed it made a first payment of about €1.55 billion ($1.63 billion) to the European Fund for Ukraine in July, from the interest generated by the Russian assets. That month, the European Commission announced an allocation of €1.5 billion to Kiev as a first tranche of aid.
In October, the European Parliament approved a loan of up to €35 billion to Ukraine to be repaid with future revenues generated by the Russian funds. The loan is the EU’s part of a package the G7 agreed in June to provide Kiev with up to $50 billion in financial support.
The government of outgoing US President Joe Biden on Tuesday announced a transfer of Washington’s portion of the loan, totaling $20 billion, to Kiev. The funds are “paid for by the windfall proceeds earned from Russia’s own immobilized assets,” the Treasury Department said in a statement.
Because US President-elect Donald Trump has threatened to cut aid to Kiev, the idea of using the assets themselves is likely to resurface, noted Bloomberg.
According to Urbain, however, taking this step would threaten the euro’s role as a reserve currency and pose risks to the broader stability of the bloc's finances. A similar warning was issued earlier by the president of the European Central Bank, Christine Lagarde.
On Tuesday, a delegation from the European Parliament arrived in Kiev to discuss the bloc’s financial aid to Ukraine.
The head of the delegation, Iratxe Garcia, said that he had asked High Representative Kaja Kallas to “put forward a legal proposal to use the €200 billion of frozen Russian state assets in order to arm and reconstruct Ukraine.”
During the meeting, Zelensky reiterated Kiev’s call to use the immobilized Russian funds to cover the cost of weapons for Ukraine, stating that $30 billion would be enough to “fully cover our skies.”