The European Union has moved a big step closer to using the near-$350 billion of Russian central bank assets frozen within Europe to help Ukraine fund its defence.
Last week the EU, after intense debates over the past six months over whether to access the Russian funds – the larger part of the $430 billion of Russia’s central bank assets frozen by the West at the onset of the war two years ago – announced that it would proceed with a plan to pass most of the interest being generated on the assets held by the Belgium-based clearing house, Euroclear, to Ukraine.
The Kremlin has labelled the plan as “banditry and theft”.Credit: AP
It said the first payment of about €3 billion euros (almost $5 billion) to Ukraine could occur as soon as July 1, with, depending on the prevailing interest rates, two payments a year totalling €2.5 billion to €3 billion in future. Last year Euroclear generated €3.25 billion of after-tax profits on the Russian funds.
Where the original discussion about accessing Russia’s assets centred on using the funds for the reconstruction of Ukraine, the new plan, which has been agreed in principle, is to funnel the interest through a special EU budget allocation known as the “European Peace Facility,” which is dedicated to funding Ukraine’s military.
The unwillingness of the Republican majority in the US House of Representatives to even consider more funding for Ukraine is hampering Ukraine’s ability to defend itself. Access to the earnings on Russia’s assets is no substitute for the massive amounts that the US has previously provided – Republicans have blocked a proposed new $US60 billion ($92 billion) of aid – but along with the start of funding from the EU’s new €50 billion financing mechanism, will help.
Ukraine, and the US, have previously argued (as Ukraine still does) that the corpus of the Russian funds, and not just the interest on them, should be seized and handed over to Ukraine as reparations for the invasion and the trillion dollar-plus damage to its infrastructure.
Euroclear, the Europeans more broadly and Western banks have, however, argued that seizure is a big step beyond freezing of the assets, one that would be in breach of international laws that generally prohibit expropriation of foreign private property assets without fair compensation.
There are precedents for seizing foreign governments’ assets, most notably the expropriation of Iraqi assets held offshore during the Gulf War, but that was during a direct military conflict between the US and Iraq and the funds were used for the post-war reconstruction of Iraq.
‘Banditry and theft’: The delicate plan to unlock a $350 billion Russian safe
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26.03.2024
The European Union has moved a big step closer to using the near-$350 billion of Russian central bank assets frozen within Europe to help Ukraine fund its defence.
Last week the EU, after intense debates over the past six months over whether to access the Russian funds – the larger part of the $430 billion of Russia’s central bank assets frozen by the West at the onset of the war two years ago – announced that it would proceed with a plan to pass most of the interest being generated on the assets held by the Belgium-based clearing house, Euroclear, to Ukraine.
The Kremlin has labelled the plan as “banditry and theft”.Credit:........
© The Sydney Morning Herald
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