EU countries have agreed to allocate profits from Russia’s frozen state assets at Euroclear for the purchase of weaponry to support Ukraine’s defence. The European Commission expects Euroclear to hand over about three billion euros a year which will be transferred to EU funds biannually. The first payout is expected in July.

The arrangement will only cover profits accrued by Euroclear since mid-February 2024, as confirmed by the deal reached by the EU’s 27 ambassadors on Wednesday, reports the Financial Times. Roughly 190 billion euros of Russian central bank assets at Euroclear are immobilised due to sanctions imposed after Russia’s invasion of Ukraine in 2022.

90 per cent of the earmarked funds will be directed towards procuring arms and military equipment for Ukraine, with the remaining 10 per cent allocated for reconstruction efforts. This allocation aims to address concerns from militarily neutral EU countries such as Austria, Malta, Cyprus, and Ireland, which advocate for using a portion of the profits for non-military purposes.

Advertisement

The decision comes after Germany, Italy, and France rejected calls, supported by the US, to confiscate roughly 260 billion euros in underlying Russian state assets immobilised abroad. They cited legal and financial concerns.

Too complex

In parallel, the US proposed a separate plan to issue 50 billion dollars in debt for Ukraine, to be repaid with anticipated future profits from Russian state assets. However, the EU deemed this approach too complex and lengthy, prioritising swift financial support for Ukraine.

Belgium, having levied a 25 per cent corporate tax on Euroclear’s profits linked to Russian assets, has collected around 1.6 billion euros since the conflict began. Prime Minister Alexander De Croo stated, according to the FT, that these revenues have been designated for “Ukraine-related expenses”.