The European Union has decided not to transfer to Ukraine €5 billion of profit obtained from the investment of frozen Russian assets in 2022-2023. The money will be left in the Brussels securities depository Euroclear as insurance in case of lawsuits by Russia.
Politico writes about this with reference to Euroclearʼs response.
"We are not distributing this profit to shareholders and are holding it until further notice. These funds will be used to cover costs, risks and losses incurred by central securities depositories due to the war in Ukraine," Euroclear said in a written response.
The European Commission believes that €5 billion is a "buffer" that will enable the payment of current and potential claims. After the freezing of profits, as of February of this year, Russian organizations filed 94 lawsuits against Euroclear with a demand to compensate for the lost funds.
The European Commission plans to transfer to aid Ukraine only revenues received after February 15, 2024. They want to send 90% of this amount through the European Peace Fund to the purchase of weapons, and the remaining 10% to the reconstruction of Ukraine.
On March 20, the head of European diplomacy, Josep Borrell, proposed this plan to EU member states. Reuters wrote that these 10% can be used to build the capacities of the Ukrainian defense industry. The decision will be taken by the Council of the EU.
As Politico writes, Ukraineʼs Justice Minister Denys Malyuska disagrees with Euroclearʼs argument. He believes that €5 billion is too much for insurance against lawsuits, given that Euroclearʼs direct losses due to the war in Ukraine are only €34 million.
At the same time, lawyers claim that retroactive confiscation of Russian profits would be a "legal minefield."
- In March, Bloomberg wrote that the EU has prepared legislation that will allow Ukraine to transfer profits from frozen Russian sovereign assets to Ukraine in July. This would allow an estimated €3 billion a year to be used to finance weapons. We are talking about profits received after February 15, 2024.
- The value of frozen Russian sovereign assets in the EU is about €211 billion. In total, the European Union, the countries of the "Big Seven" and Australia have frozen about €260 billion in the form of securities and cash.