EU to Utilize Frozen Russian Assets for Ukraine’s Defense
The European Union Council has approved a plan to use Russia’s frozen assets for the benefit of Ukraine. The plan, accepted by EU member states, outlines how revenues from Russian assets will be used to support the defense and reconstruction of Ukraine.
Under the approved plan, 90 percent of the profits generated from Russian assets will be allocated to support defense and military efforts in Ukraine through the European Peace Fund. The remaining 10 percent will be directed towards various programs aimed at the reconstruction of the country.
Following the war, EU countries froze around 200 billion euros of assets belonging to the Russian Central Bank. Financial institutions holding these assets have been able to generate substantial profits through reinvestments as the assets mature.
Euroclear, a Belgian-based securities clearing and custody service provider, holds approximately 180 billion euros of the frozen Russian Central Bank reserves. As the assets on Euroclear’s balance sheet increase, the institution earns significant interest income. In fact, Euroclear made over 3 billion euros in interest income last year from the frozen Russian assets affected by EU sanctions.
With an annual profit of approximately 3 billion euros expected from the conversion of frozen Russian assets, EU countries are now able to invest in the purchase of weapons and ammunition for Ukraine’s defense. This decision marks a significant step towards leveraging frozen assets for the benefit of Ukraine’s security and reconstruction efforts.
