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Over the span of two years of war, the European depository Euroclear has earned about 5 billion euros on frozen Russian assets — Anticorruption Action Centre board member

«Despite receiving €1.3 billion in taxes over two years, they provided us with only €500 million in aid. This means that Belgium has provided Ukraine with humanitarian, military, or any other aid amounting to less than 40% of what they earned in taxes during this war» — Olena Halushka

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Member of the AntAC Board: The instrument of proceeds from frozen assets can be used more efficiently and profitably for Ukraine.

On 21 May, the Council of the European Union decided to transfer the proceeds of frozen Russian assets to Ukraine’s military needs. This amounts to approximately 3 billion euros per year. It is planned that the first portion of the funds will be transferred to Ukraine in July this year, and they will be raised through the European Peace Facility.

This was stated by Olena Halushka, a board member of the Anti-Corruption Action Centre and co-founder of the International Centre for Ukrainian Victory, on Hromadske Radio.

«The Russian Central Bank, like all central banks, has kept and still keeps its bank reserves in countries such as China, which they need to maintain the exchange rate, foreign economic activity, and the stability of their economy. Since the beginning of the full-scale invasion, the G7 countries and the European Union have frozen these assets. That is, the Russian Central Bank no longer has any access to them», — Halushka explains.

According to her, the frozen assets continued to generate income. This profit was generated by sanctions against Russia. The financial institutions that had and still have frozen funds continued to make money from them.

The largest amount of Russian assets is frozen in the European depository Euroclear, located in Belgium. We are talking about approximately €190 billion, including the Russian Central Bank. A member of the board of the Anti-Corruption Action Centre says that Euroclear has earned more than €5 billion from these funds in two years. Of this, 25% went to the Belgian budget as a tax, and about €3.8 billion remained at Euroclear’s disposal under an EU decision that was actively lobbied by Belgium.

«This gives us an idea of the scale of the figures that can be earned. Of course, this will depend on interest rates on securities, which change every year. But with all the frozen Russian funds, which are about $300 billion worldwide, it will be possible to earn up to $5 billion.

Currently, financial institutions are following the principle of complete risk avoidance and investing Russian funds in the safest securities, earning a minimum but trying to protect themselves as much as possible. But even this instrument of income on frozen assets can be used more efficiently and profitably for Ukraine», — Halushka says.

According to her, these funds will not be transferred directly to the Ukrainian budget. In February, the European Union decided to put them into a separate account first. This issue was discussed for a long time.

«Their lawyers have been investigating the nature of these profits for a long time. The position of many international lawyers is that the profits, just like the principal, belong to Russia, and therefore everything should be confiscated as a countermeasure and not to ‘play’ with these profits, a ‘half-measure’ approach. But European lawyers concluded that the profits do not belong to Russia, unlike the principal. Therefore, in February, the EU decided to set aside the profits separately, and now it has decided to use them for the benefit of Ukraine through two instruments.

The first is the European Peace Facility, a special EU fund launched in 2021 aimed at military assistance to partner countries. About 90% of these funds will go there. The remaining 10% will be used through other programmes, probably for reconstruction, perhaps something related to macro-finance», — says the board member of the Anti-Corruption Action Centre.

It is expected that the amount of aid for Ukraine will be up to €3 billion per year. The European Union’s decision applies only to member states. According to Halushka, most of the frozen assets are in Belgium, followed by Luxembourg, France, and Germany. At the same time, Belgium is one of the main lobbyists against confiscation, as it tries to avoid risks as much as possible.

Euroclear has earned more than €5 billion in two years, most of which has been set aside for contingencies. It is assumed that if Russia goes to court and they decide that the freeze is illegal and confiscation is necessary, Euroclear will need a reserve from which to pay for it.

«Here we look at the history of Russia’s courts and appeals and see that there have been several attempts to do this in Europe, they failed, and Russia went to its own courts. Therefore, the question arises why Euroclear should return funds frozen by Western sanctions under a Moscow court decision. I don’t understand why Euroclear is playing such games and not drawing a clear red line that no courts in Russia will be recognized.

But this is not even the ‘pinnacle’ of the story with Belgium. Despite the fact that they received €1.3 billion in taxes in two years, they provided us with only €500 million in aid. This means that Belgium provided Ukraine with humanitarian, military, or any other aid amounting to less than 40% of what they earned in taxes during this war», — Halushka says.

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