By utilizing the frozen funds, they want to release billions of euros to support Ukraine. Confiscating the funds has been legally challenging.
BRUSSELS The proceeds of the frozen funds from Russia should be used for the reconstruction of Ukraine. This is the line of the EU Commission in its presentation today.
The Commission’s proposal concerns assets frozen by the Russian Central Bank, which are worth more than 200 billion euros in the EU. A large majority of the funds are kept in the Belgian securities depository Euroclear.
Over time, income has accumulated on the funds, which has increased the value of the capital. In the future, the proceeds from the frozen funds could be used for the benefit of Ukraine.
According to the proposal, central securities depositories would be obliged to register and manage the income received from frozen funds so that these can be identified in the accounting.
After this, the profits should not be directed to shareholders or other third parties.
Later, these revenues could also be used for the reconstruction of Ukraine. However, this would require a separate proposal from the Commission and the approval of the member states.
Legally difficult question
The use of frozen funds from Russia has been demanded since the beginning of the war of aggression against Ukraine. However, deciding on the matter has been difficult for the EU.
The background is, above all, a concern for the protection of assets, and that the euro area remains a reliable and attractive investment destination.
Even now, the Commission’s proposal would not interfere with the capital itself, but only with the income generated by it.
The assessment of the economic effects of confiscation of income is therefore not dizzying. EU presidency country According to Spain’s estimate confiscation could generate 15–17 billion euros for the EU by 2027.
It requires the unanimity of the member countries
Next, the Commission’s proposal is transferred to the EU countries. Confiscation of the frozen profits would require the unanimous approval of the member countries.
Finland has rushed the decision to confiscate the frozen assets. The EU leaders who met in October also demanded the Commission to intervene in the frozen funds.
However, several countries have had reservations regarding the confiscation of frozen assets. The biggest question mark is Hungary, which also blocks other decisions related to Russia and Ukraine.
The Commission did not publish the content of the proposal before the matter was referred to the EU Council of Ministers.
This is in line with previous sanctions decisions, the details of which have not been published at the processing stage.
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