Ukraine to receive funds from frozen Russian central bank profits

Ukraine is set to receive financial assistance from the profits of the Central Bank of the Russian Federation, as proposed by the European Union.

It is reported that starting in July, funds from these profits will be allocated for procuring weapons and bolstering the defense industry in Ukraine.

The proposal entails the implementation of a tax on income generated from immobilized reserves to direct approximately 3 billion euros ($3.25 billion) annually to support Ukraine's interests.

The Group of Seven nations, the EU, and Australia have immobilized around 260 billion euros in assets belonging to the Russian central bank, primarily comprising securities and cash. Of this sum, more than two-thirds are blocked within the EU.

The urgency of this funding is underscored by Ukraine's pressing need for artillery, exacerbated by the delay in accessing approximately $60 billion in U.S. assistance, which remains held up in Congress. 

Seeking solutions amid waning US assistance

As Ukraine grapples with a shortfall in international assistance, the issue of confiscating Russian assets for Ukraine's benefit gains traction. Since the onset of the conflict in Ukraine, Western nations have collectively frozen an estimated $750 billion of Russian assets.

European Commission President Ursula von der Leyen, as early as Feb. 28, urged the EU to deliberate on utilizing profits from frozen Russian assets for joint military procurements for Ukraine.

She emphasized the significance of this gesture, stating that there's no greater symbol or utility for these funds than enhancing the security of Ukraine and Europe as a whole.

Moreover, on March 7, the Ukrainian government convened to discuss the confiscation of Russian assets valued at 300 billion euros.

Switzerland's Council of States has thrown its support behind the proposition of redirecting confiscated Russian assets to Ukraine. This decision, endorsed by parliament, empowers the Swiss government to establish an international legal framework facilitating the utilization of assets from aggressor states to compensate affected nations.

Under this initiative, plans are under way to lawfully transfer the frozen assets of the aggressor's central bank to the country that has been targeted in the conflict.

Assessing losses and frozen assets

Oleh Ustenko, economic advisor to the Ukrainian president, highlighted the disparity between Russia's frozen assets and Ukraine's actual losses.

 "We are talking about approximately $750 billion if we are discussing direct losses. If we add indirect losses, the figure will increase to 1 trillion," Ustenko said.

In summary, the proposal to allocate profits from the immobilized reserves of the Russian central bank marks a significant step toward bolstering Ukraine's defense capabilities amid ongoing geopolitical tensions.

Source: Newsroom