EU reaches historic decision to use revenues generated by Russian assets to support Ukraine
Published
In response to Russia’s full-scale invasion of Ukraine, the EU decided to immobilise the Central Bank of the Russian Federation’s assets in the EU. During the Swedish Presidency of the Council, an EU Working Group was established to investigate the possibility of using frozen Russian assets to support Ukraine. This work as resulted in the EU’s decision on 21 May to use the net extraordinary revenues generated by the immobilised assets to provide military and macroeconomic support to Ukraine.
“The decision is an important step towards compensating Ukraine for the widespread destruction Russia has caused through its aggression. This decision is the result of an initiative Sweden took during the Swedish Presidency of the Council of the European Union, and an important part of the long-term support to Ukraine. The Government is in favour of additional and farther-reaching measures concerning Russia’s immobilised assets insofar as they are compatible with EU law and international law,” says Minister for Foreign Affairs Tobias Billström.
Extraordinary revenues have accrued to central securities depositories in the EU from their management of Russian Central Bank assets that were immobilised as a result of the EU’s sanctions against Russia. These revenues will now be used to support Ukraine. The extraordinary revenues amount to an estimated EUR 3 billion in 2024.
This year, 90 per cent of the funds transferred to the EU will be used for military support through the European Peace Facility. The remaining 10 per cent will be allocated to the Ukraine Facility in the form of macroeconomic support. This allocation will be reviewed on an annual basis.
EU management of immobilised Russian assets
The EU has adopted thirteen sanctions packages against Russia in response to its full-scale invasion of Ukraine. Since February 2022, financial institutions in EU Member States have been prohibited from carrying out transactions related to the management of the Russian Central Bank’s assets or reserves. As the central securities depositories are not permitted to transfer revenues generated by the Russian Central Bank’s assets to the Russian Central Bank, extraordinary cash balances are accumulating in their balance sheets. It is incumbent on the central securities depositories to manage these funds the same way as their other holdings. This has resulted in extraordinary revenues and windfall profits accruing to the central securities depositories, which are in turn affected by the market conditions. These revenues will be allocated to Ukraine.
It should be noted that it is not the Russian Central Bank’s assets that will be used to benefit Ukraine, but rather the extraordinary revenues accruing to the central securities depositories as a result of EU sanctions against Russia.
The terms ‘freezing’ and ‘immobilising’ refer to the measures taken against Russian assets in response to Russia’s full-scale invasion of Ukraine. Private assets that must not be used or transferred are commonly referred to as being ‘frozen’, whereas State assets are referred to as being ‘immobilised’.
Press contact
Press Secretary to Minister for Foreign Affairs Tobias Billström
Phone (switchboard) +46 8 405 10 00
Mobile +46 76 147 17 52
email to Daniel Urso
X