The European Union has approved the use of profits generated by Russian assets frozen due to sanctions from the invasion of Ukraine to finance aid to the country, particularly in defense. This decision was made in response to the urgent need for military assistance and is intended to support Ukraine in its time of need.
The EU agreement stipulates that 90% of these profits will go to the European Peace Support Mechanism, which co-finances weapons and military aid for Ukraine. The remaining 10% will be allocated to the recovery efforts in Ukraine through various community budget programs.
Russia’s Central Bank assets and reserves totaling more than 200 billion euros are held up in the EU due to sanctions, with around 192 billion euros deposited with Euroclear. Reinvestment of interest on these assets generates extraordinary profits of 2.5 to 3 billion euros annually, which the EU now requires central securities depositories to separate from their other profits.
Belgium will apply corporate income tax to these profits, amounting to 25% of the total, with the remaining amount to be used for Ukraine support efforts. Securities depositories like Euroclear will be allowed to retain 10% of these profits temporarily to meet capital requirements, given the financial impact of the conflict in Ukraine on their assets.
EU High Representative for Foreign Affairs and Security Policy, Josep Borrell, commended the decision to use Russia’s frozen assets for Ukraine, emphasizing the urgent need for military assistance. He urged immediate implementation of the agreement.
The EU’s move was praised by Borrell who emphasized that providing military assistance through European Peace Mechanism is important and must be done promptly in order have a meaningful impact on situation.
