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European Commission intends to raise €15 bln of frozen Russian funds for Ukraine

European Commission intends to raise €15 bln of frozen Russian funds for Ukraine The European Commission wants to raise €15 bln of frozen Russian funds for Ukraine (Photo: Getty Images)

The European Commission intends to raise 15 billion euros from Russia's frozen assets to be used as financial aid for Ukraine. Still, the plan must be supported by all EU member states, according to the Financial Times.

According to the newspaper's sources, on Tuesday, December 12, Brussels will propose to limit the profits earned from Russia's frozen assets in the EU, aiming to eventually withdraw up to €15 billion in favor of Ukraine.

The European Commission's plan has been delayed since the summer after several EU member states and the European Central Bank raised legal and financial concerns.

However, the hesitant attempts by the U.S. and EU to agree on additional financial support for Ukraine have given new impetus to proposals to capitalize on Moscow's frozen funds.

Valdis Dombrovskis, the commission's vice president, emphasized the importance of exploring ways to utilize Russia's frozen assets and their proceeds to support Ukraine, as reported to the Financial Times.

According to him, the G7 countries have agreed to freeze assets until Moscow compensates Ukraine for its losses, and it is time to think about how best to use the income generated during this time.

Stages in the implementation of the European Commission's plan

According to sources briefed on the proposal, to win over skeptics, the EC will first require securities depositories that hold Russian central bank assets to place the profits earned from them in separate accounts.

In the plan's second phase, the profits would be transferred to the EU's general budget to help support Ukraine.

EU member states will need to unanimously support the plan, as well as further steps to implement it before the money can be disbursed to Ukraine.

Only the proceeds from the assets of Russia's central bank would be used as part of the proposal. The commission estimates this would generate up to €3 billion annually, or €15 billion, between 2023 and 2027. However, officials have cautioned that this amount would depend on interest rates during this period.

Utilization of frozen Russian assets

For several months, European officials have been exploring ways to recover the proceeds of about $300 billion in Russian assets that have been frozen since the start of Russia's large-scale invasion of Ukraine.

Ukraine, together with its international partners, is working to create the possibility of confiscating frozen Russian assets, including state-owned ones, in allied countries. These funds should be used to rebuild Ukraine. We are talking about almost $500 million.

We also reported that the European Union supported using proceeds from frozen Russian assets in favor of Ukraine. The European Commission plans to put forward legal proposals in December.