Brussels takes first steps to use frozen Russian assets to rebuild Ukraine

Brussels – Russian assets frozen in the EU to be used to help rebuild Ukraine. The European Commission is moving, tentatively, its first steps toward using Russian Central Bank assets frozen in the EU, thanks to sanctions, to rebuild Kyiv in due course. And it is proposing today (Dec. 12) that the Twenty-Seven move profits from sanctioned Russian assets in the EU into a separate account, as a first, cautious step to then go on to use them to finance Ukraine’s reconstruction.

The “how to do it” will have to be decided later based on what the governments decide; meanwhile, the governments will have to approve the proposal unanimously (and that will not be easy). The proposal forwarded to the capitals today (without first being published) can be seen as only the first step in a multi-step process, and will certainly be discussed first by the heads of state and government at the European summit to be held in Brussels between Thursday and Friday.

Since this is a particularly sensitive matter due to its repercussions on markets and requiring unanimity in the Council, it is likely, if not probable, that the final decision will take a long time to see the light of day. The European Commission itself has decided to move with extreme caution, as this is a decision that “is unprecedented,” says an EU official, explaining that Brussels has therefore opted in the meantime, as a first move, for the idea of immobilizing the net profits in a separate account to secure them for use at a later date.

The European Central Bank itself in recent months has urged caution. After months of preparatory work and in order not to run into legal problems, Brussels is proposing to use not the actual assets (which the European Commission estimated at about 211 billion euros), but funds derived from the mere fact of having been immobilized in the EU territory, mainly at Euroclear, in Belgium, and Clearstream, in Luxembourg. The proposal, an EU official explains, will not be retroactive, so it cannot target the extra profits made so far, but will apply from the moment governments have found a common position on the issue.