The Complexity of Using Revenues from Frozen Russian Assets

In the European Union, there are concerns that Russia may resort to retaliatory measures if the profits from its assets frozen in the EU are confiscated and given to Ukraine. However, as demonstrated by practice, the President of the European Commission, Ursula von der Leyen, does not make statements without reason – probably, the corresponding political decision has already been made.

This was stated by economist and Executive Director of the Center for Economic Strategy, Hlib Vyshlinsky, during an interview on Hromadske Radio (in Ukrainian).

Earlier, on June 22, President of the European Commission, Ursula von der Leyen, stated that Brussels would propose using the proceeds from over 200 billion euros worth of assets of the Russian Central Bank frozen in the EU for Ukraine’s reconstruction.

“The European Commission, through its President, has committed to allocating 50 billion euros over four years (to support Ukraine). Additionally, this important statement was made yesterday that by the summer holidays, a mechanism for utilising the revenues from Russian assets will be presented. In fact, it was quite an unexpected statement by the President of the European Commission. If we look at the official press releases distributed before the conference on Ukraine’s reconstruction in London, they did not mention the use of revenues from Russian assets. They only spoke about the 50 billion. So, it is currently unclear whether these revenues, the 200 billion euros, will be included if the European Commission makes the decision, or whether they will be additional to those 50 billion,” said Vyshlinsky.

He also explained the specificity of revenues from Russian assets frozen in the European Union.

“No one has the exact amount. They talk about 300 billion euros of reserves of the Russian Central Bank that were invested in various state assets. All of them need to be identified. From what is currently known, it is about 200 billion euros, denominated in euros. They were invested in securities and accounts of the Belgian depository Euroclear and the Luxembourg-based Clearstream. I understand that if Ursula von der Leyen made the statement, then there would be an appropriate political decision. Now everyone will quickly search for mechanisms to implement it technically,” the economist explained.

At the same time, he noted that during the conference in London, there were concerns expressed in the corridors about the possibility of Russia resorting to retaliatory measures regarding the ownership of Western companies that invested in Russia before the full-scale invasion of Ukraine.

“We should understand that the President of the European Commission does not make statements like that. As we can see, during the war, she often puts the flag forward, so to speak. She makes a political statement, and then European bureaucrats and EU members have to accept it as a reality they will have to deal with. I understand that she has separated the issue of using the assets themselves, meaning to take, for example, German bonds, sell them, and give those billions to Ukraine, and the issue of using the revenues. Now we are talking about the mechanism for using the revenues. As for using the assets themselves, it seems there is also a positive movement starting now,” added the interviewee.