The bloc is exploring “uncharted territory,” sources told the British outlet
FILE PHOTO. © AFP / Pierre-Philippe Marcou
European Union officials are considering whether to send Ukraine profits generated from Russian assets frozen within the bloc, the Financial Times has reported, citing people familiar with the discussions.
EU member states and European Commission officials convened on Wednesday to examine how they might move funds held at Euroclear, the world’s largest settlement house, over to Ukraine, as Russian-owned assets there have accrued interest since they were first frozen.
Targeted under an unprecedented Western sanctions campaign, the Russian assets stuck at Euroclear amount to €196.6 billion ($211.1 billion), the vast majority of which is owned by the country’s central bank. As the assets have generated hundreds of millions in interest over the last year, the clearing house has reinvested those funds, and officials now hope to transfer the resulting profits to Kiev.
“It’s not entirely clear who this interest belongs to,” one person familiar with the plans told FT, adding that while passing the profits to Ukraine would be “uncharted territory,” the EU believes “it could be done.”
Some European officials have called to extend a similar concept to a wider range of frozen Russian assets – including those trapped at Clearstream, a settlement agency based in Luxembourg – with another source telling the outlet that financial institutions simply “don’t know what to do with this money.”
However, settlement houses attempting to implement profit-siphoning schemes are likely to face legal challenges, as Euroclear has already been sued by Russian asset-holders. In March, the firm declared that it would not touch “any profits related to the Russian sanctions until the situation becomes clearer,” suggesting it could be hesitant to go forward with the plans.
Russia’s National Settlement Depository (NSD) has attempted to obtain permits to release the Russian-owned funds from European clearing systems since last year. However, such permits do not ensure that investors will ever see their money, given uncertainties about withdrawing procedures in the EU, as well as the bloc’s designs on the cash.
Moscow has called the Western attempts to transfer the seized assets to Ukraine “barbarism,” and “theft” that violates international law, while the Kremlin has warned that Russia will respond in kind if necessary.
EU officials will discuss the matter further during a meeting in late June, with the Commission recently saying that it is “exploring ways” to use frozen assets to “ensure that Russia pays for the damages caused in Ukraine.”
