EU leaders have approved the plan to utilise proceeds from frozen Russian assets, currently held at Euroclear, for aiding Ukraine. The Kremlin argues that the proposal would undermine international law and warns of inevitable damage to Europe and decades of legal wrangling. Meanwhile, Western banks are not very keen either as they fear the risks of costly litigation.
During a summit in Brussels, leaders from the EU’s 27 member countries collectively agreed to proceed with the proposal, initially presented by the European Commission, reports Reuters. “I am confident that we can act very quickly”, stated Charles Michel, president of the European Council of EU leaders, addressing reporters following the summit on Thursday.
The proposed plan involves transferring 90 per cent of the profits from the frozen Russian assets to an EU-managed fund designated for financing arms for Kyiv, with the remaining 10 per cent allocated for budgetary assistance to Ukraine.
Around 70 per cent of all Russian assets immobilised in the West are held in the central securities depository Euroclear, which has the equivalent of 190 billion euros worth of various Russian central bank securities and cash. According to estimates provided by the Commission, profits generated from the frozen assets could range between 2.5 and 3 billion euros annually.
Retaliation
The Kremlin has issued a stern warning against such measures. Kremlin spokesman Dmitry Peskov cautioned that the implementation of such plans could tarnish Europe’s reputation as a reliable protector of property rights and result in prolonged legal battles. “The damage will be inevitable. The persons who will be involved in making such decisions, the states that will decide this, of course, they will become the objects of prosecution for many decades.”
Russian Foreign Ministry spokeswoman Maria Zakharova went further, condemning the proposed actions as “simple banditry and theft”.
Fears of costly litigation
Furthermore, Western banks are expressing concerns about the potential risks associated with the EU’s proposal, lobbying against them due to fears of costly litigation, senior industry sources say. Some banks are worried about potential liability if they participate in financial transfers to Ukraine. They fear that the EU’s plan might expand to include assets held in accounts for sanctioned individuals and entities, although the EU hasn’t discussed such an extension yet. Additionally, unnamed sources, acknowledging the sensitivity of the issue, have shared concerns about the broader impact on trust in the Western banking system if the proposals move forward without careful consideration.