In a major development, the European Union has approved the use of profits generated by Russian assets frozen due to sanctions for financing aid to Ukraine. This decision was made on Tuesday (21) and will see the funds primarily focused on defense, with 90% of the profits going towards the European Peace Support Mechanism, which co-finances military aid to Ukraine. The remaining 10% will be used to support recovery efforts in Ukraine through community budget programs.
The EU has currently frozen over 200 billion euros of Russian assets, with a large portion held in Euroclear, a central securities depository. Interest earned on these assets generates profits of around 2.5 billion to 3 billion euros annually, which are subject to corporate income tax in Belgium, where Euroclear is based. The Belgian government has put rules in place that prioritize the majority of these profits towards aid for Ukraine.
The EU Council has now approved a plan that will apply these rules to the remaining profits generated by Russian assets frozen due to sanctions. Central securities depositories like Euroclear can temporarily retain up to 10% of these profits for capital requirements before they are reinvested towards aid for Ukraine. This decision was welcomed by EU High Representative Josep Borrell, who urged for its rapid implementation and emphasized the importance of using the frozen assets for military assistance in Ukraine.
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