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Ukrainian foreign relations

EU Considers Scheme to Transfer EUR 200 Billion in Russian Assets to Rebuild Ukraine

Strategic Insights

— 2 min read

European Commission officials are advancing a plan to transfer almost EUR 200 billion in frozen Russian assets to Ukraine at the end of the war, with the aim of rebuilding the country and pressuring Russia to accept post-war compensation. This option is seen as a compromise between confiscating the assets, which a majority of EU countries oppose, and the current system, which allows a single country to veto the transfer of assets. The plan would involve transferring the assets to a "special purpose vehicle" backed by EU and G7 countries, which would allow for greater control over the assets and potentially higher returns for Ukraine.

Key Takeaways:

  • The European Commission is considering a plan to transfer almost EUR 200 billion in frozen Russian assets to Ukraine at the end of the war.
  • The plan involves transferring the assets to a "special purpose vehicle" backed by EU and G7 countries, allowing for greater control over the assets and potentially higher returns for Ukraine.
  • This option is seen as a compromise between confiscating the assets and the current system, which allows a single country to veto the transfer of assets.
  • Supporters of the plan include Baltic countries bordering Russia, while Western European countries such as Germany and Italy oppose confiscation of the assets.
  • The plan would be discussed by EU foreign ministers on Saturday, with a preparatory note suggesting that they consider "further options for the use of revenues stemming from Russian immobilized sovereign assets."
  • The G7 countries have agreed to funnel EUR 45 billion in profits generated by investing the assets to Ukraine in 2024, while leaving the underlying assets untouched.
  • The current system allows a single country to veto the renewal of sanctions every six months, which could potentially allow Hungary to hand the assets back to Moscow.
  • The proposed fund would be open to G7 countries, including the UK and Canada, that favor confiscating the assets, but details are still being hammered out.
  • Critics worry that EU taxpayers could bear the brunt of any losses resulting from the riskier operations.
  • The Belgian government has recently warmed up to the Commission's plan, and countries such as Spain are backing the idea.

Statistics:

  • The European Commission is considering transferring almost EUR 200 billion in frozen Russian assets to Ukraine.
  • The G7 countries have agreed to funnel EUR 45 billion in profits generated by investing the assets to Ukraine in 2024.
  • The European Stability Mechanism (ESM) is a money pot to bail out countries, backed by eurozone members and set up outside the EU treaties.
  • The proposed fund would potentially involve multiple G7 countries, including the UK and Canada, in support of confiscating the assets.
  • The Belgian central bank currently invests the assets with the lowest risk-free rate of return available.

Sources:

  • Politico, citing several officials
  • Ukrinform
  • European Commission President Ursula von der Leyen
  • European Commission officials
  • Baltic countries bordering Russia (Latvia, Estonia)
  • Euroclear CEO Valerie Urbain
  • Belgian government officials
  • Senior non-Belgian diplomat
  • Spanish government officials

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