The Vice-President of the European Commission, Věra Jourová, announced, on Tuesday 12 December in Strasbourg, that the European Union had submitted a legislative proposal to the EU Council to establish a regulatory framework for identifying and confiscating the profits generated by the assets of the Central Bank of Russia in order, in a second phase, to mobilise them to contribute to the reconstruction of Ukraine.
This proposal responds to the call of the October European Council, explained Ms Jourová (see EUROPE 13281/1).
Shortly after Russia attacked Ukraine in February 2022, the EU adopted sanctions that froze around €200 billion of the Central Bank of Russia assets. Most of these public assets are held by two central clearing houses - Euroclear and Clearstream - based in Belgium. They generate exceptional profits, mainly in the form of cash, which the Belgian State has partly taxed as a sovereign country. It is the remainder of the profits generated that the Commission intends to confiscate.
However, according to a European official, the legislative proposal will only levy windfall profits generated after the adoption of the legislative framework, which requires the unanimous agreement of the Member States. And, for reasons of cost and the scale of the amounts involved, the profits generated by freezing the assets of Russian public companies do not fall within the scope of the legislative proposal.
When the political conditions are right, the Commission will present a second legislative proposal to mobilise the confiscated sums with a view to allocating them to Ukraine’s reconstruction programmes via the EU budget, in particular the future ‘Ukraine Facility’, which will concentrate EU macroeconomic support over the period 2024-2027.
As the procedure used is identical to that used when presenting packages of sanctions against Russia, the legislative text will not be made public until it has been adopted by the EU Council.
At the European Parliament, Andrius Kubilius (EPP, Lithuanian) stressed the need to set up a system to compensate for the damage caused by Russia to Ukraine by mobilising frozen Russian assets. However, he described the proposed mechanism as “insufficient” in that it would generate “no more than €3 billion” a year, preferring the adoption of specific countermeasures by the EU and its Member States. (Original version in French by Mathieu Bion with Camille-Cerise Gessant)