Financial Times: The US offered to raise debt for Ukraine under the guise of profits from frozen Russian assets

Author:
Oleksandra Amru
Date:

The United States offered to raise tens of billions of euros in debt for Ukraine as collateral for future profits from Russian state assets frozen by the West.

The Financial Times writes about it.

The G7 countries cannot reach a consensus on what to do with the €260 billion in nuclear weapons that Western countries froze after Russiaʼs full-scale invasion of Ukraine.

The US supported the idea of full confiscation of assets and their transfer to Ukraine, but the EU does not approve of this idea, as it "could violate international law and destabilize financial markets." At the same time, the European Union is considering providing Ukraine with income from basic assets.

The issue of the use of Russian missiles for the benefit of Ukraine has become acute in recent months, as the escalation of Russian aggression continues for the third year, and the US Congress is delaying the necessary assistance to Ukraine.

"We are at the stage when we should explore all possible ways to maximize the value of immobilized reserves for Ukraine. We canʼt wait forever, we know that," said US Deputy National Security Advisor for International Economic Affairs Daleep Singh.

Singh said the U.S. proposal would include putting forward "the implied value of the future interest flow on the frozen assets through bonds or credit."

He noted that the Europeans have already shown readiness to transfer interest from assets to Ukraine once every two years. However, there were ways to "increase the value of these income streams over time."

“Instead of simply transferring annual returns on assets, itʼs conceptually possible to transfer 10-year or 30-year returns. The present value of those gains is huge,” he said.

A European official said that Russian frozen assets stored in the central depository of Euroclear in Brussels could bring in €30-40 billion over ten years. While in the next 15-20 years this amount will reach €50-60 billion. However, these are approximate amounts, because the profit from rosactives depends on future interest rates.

This proposal is now to be discussed by the G7 finance ministers on the sidelines of the World Bank and International Monetary Fund meetings in Washington next week. Singh says the goal is to reach a resolution at the annual G7 summit in June.

Most of the frozen assets of the Russian Federation — €200 billion — are in the EU, in the central depository of Euroclear in Brussels. During the full-scale war between Russia and Ukraine, they brought in €3.85 billion in profit. The European Union discussed the use of future profits for the purchase of weapons for Ukraine and for the recovery of the country from the consequences of Russian aggression.

Given the US proposal, it would be possible to use part of the profits for the purchase of weapons and reconstruction, and part for paying off the debt.