Page 22 - RusRPTJun24

new products, and it will focus mostly on enforcing the existing thirteen rounds of sanctions.
2.8 EU seizes CBR frozen assets profits
After months of dithering, EU member states signed off on the long-awaited decision on May 8 to confiscate the profits earned from investments of the $300bn of frozen Central Bank of Russia (CBR) assets and hand them to Ukraine.
The resolution will generate an estimated €3bn per year, with 90% allocated to arms purchases for the Armed Forces of Ukraine (AFU) and the remaining 10% dedicated to humanitarian aid.
Belgium, which chairs the EU at the moment and where most of the money is located, said that it will retain €5bn of previously earned profits as a war chest to fund possible legal suits by Russia protesting the decision. It will also retain 10% of the proceeds going forward for the same purpose.
The Kremlin has threatened legal action if its money is confiscated – an unprecedented move – and also threatened to confiscate western assets and cash that is still trapped in Russia.
The decision was announced by Belgium’s EU presidency, where the Euroclear depository is located that holds €190bn of the €260bn in frozen Russian Central Bank reserves in Europe. Convincing Belgium to agree to this measure was challenging as the trustworthiness of the Euroclear payments and settlements system is on the line.
The US has been pushing for the confiscation of the principal assets, not just the profits earned from them. However, in the lead up to the May 8 decision it has been reported that the White House has dropped its demand for outright seizure of all the CBR frozen money.
European powers, notably Germany and France, have been very reluctant to seize the CBR money, fearing that it will undermine trust in the euro and lead to withdrawals of foreign assets from Europe by Asian and Global South nations that could undermine the European banking system.
EU members with a neutral stance on support for Ukraine, including Austria, Ireland, Malta, and Cyprus, have insisted that their contributions should only be used for humanitarian expenses.
The funds will be distributed through a specially established trust, the Ukraine Facility, managed by the European Commission or the G7, ensuring transparency and accountability. Belgium had initially intended to channel taxes collected on profits from investing Russian reserves directly into aid for Ukraine, but this move was criticised by other EU members.
22 RUSSIA Country Report June 2024 www.intellinews.com