With approximately $300 billion in Russian assets frozen in the West due to the Ukraine invasion, profits and interest continue to accumulate. The focus now shifts to utilizing these gains to support the Ukrainian military in their ongoing battle against Russian forces.
Debates have been ongoing regarding the legality and wisdom of confiscating these frozen assets. While the US and UK lean towards confiscation, objections have been raised by countries like France, Germany, Indonesia, Italy, Japan, and Saudi Arabia, as well as officials such as Christine Lagarde from the European Central Bank.
Confiscation is deemed a risky move due to concerns about setting a negative precedent, violating sovereignty, and potential legal and financial repercussions. However, the idea of utilizing the profits earned from these assets is gaining traction as a viable alternative.
Both Europe and the US see potential in using these profits without the same level of risk. While the Europeans propose transferring funds to Ukraine annually or biennially, the Americans are eager to expedite the process.
The debate intensifies as the Group of 7 summit approaches, where a consensus is hoped to be reached. Let’s delve deeper into the proposed plans.
The European Strategy
The European Union is set to formally adopt a plan to utilize the interest gained from frozen Russian assets to support Ukraine’s military efforts and aid in the country’s reconstruction.
EU nations have agreed to allocate 90% of the profits to purchase arms for Ukraine through the European Peace Facility, with the remaining 10% designated for reconstruction and nonlethal purchases.
This plan specifically targets profits from Belgium’s Euroclear, where a significant portion of Russian central bank assets are held. The European Commission anticipates annual transfers of approximately €3 billion, with the first payout expected in July.
While this amount is substantial, it pales in comparison to the aid promised by the US. Nonetheless, it represents a significant step towards supporting Ukraine in its time of need.
Euroclear’s role in this process is crucial…
2024-05-14 16:12:28
Link from www.nytimes.com