12
Mar
2025
Watch
Frozen Russian assets (debate)
Mr President, honourable Members, thank you for the opportunity to contribute to this debate on Russian frozen and immobilised assets. As you may well know, the restrictive measures on these assets are a key element of the sanctions adopted by the EU in close cooperation with Western partners against Russia. Let me first clarify upfront that Russian assets are subject to different restrictive measures, depending on whether they are public or private assets and on their ultimate owner. As part of the sanctions imposed by the EU on Russia in response to its war of aggression against Ukraine, the assets of the Central Bank of Russia held by financial institutions in the Member States have been immobilised since February 2022. The immobilised sovereign assets held in the EU are worth EUR 210 billion and represent the largest share of such immobilised assets worldwide. This is the most relevant and sizeable part of the Russian assets under EU sanctions, for the purposes of today's debate. In May 2024, EU Member States agreed to set aside the extraordinary profits of Russian immobilised assets and to use them for the benefit of Ukraine. The assets and reserves of the Central Bank of Russia should remain immobilised until Russia pays for the damage it has caused to Ukraine. The position has been repeatedly affirmed by the G7 countries and the European Union. The prohibition of transactions on these assets generates an extraordinary cash accumulation on the balance sheets of central security depositories. EU central securities depositories prudently manage the cash balances and thereby earn an interest income. These extraordinary and unexpected profits could reach about EUR 3 billion per year, after tax of course, subject to the prevailing level of interest rates. These interest revenues and profits do not constitute sovereign assets and do not have to be made available to the Central Bank of Russia under applicable rules, even after immobilisation ends. The decision to re-allocate the interest, revenues and profits to support Ukraine is made within the windfall contribution framework, which was adopted in 2024 following thorough discussions in the ad hoc Council working party established for that same purpose. This allowed us to take the necessary implementing actions to fulfil the commitments made by the European Council and the G7 leaders to provide Ukraine with approximately EUR 45 billion in loans, to be repaid by future flows of extraordinary revenues from immobilised Russian assets. This money will be used to support Ukraine's urgent budgetary, military and reconstruction needs. As part of the G7-led extraordinary revenue acceleration (ERA) loans initiative, in January 2025, the European Commission disbursed the first EUR 3 billion tranche of its exceptional macro-financial assistance loan for Ukraine, which will be repaid with the proceeds from immobilised assets of the Central Bank of Russia in the EU. Additional disbursements will follow throughout this year, bringing total support to some EUR 18 billion. The Commission warmly thanks the European Parliament for its swift action to approve this MFA loan. This underscores the unwavering commitment of the EU and its G7 partners to support Ukraine in its fight for its freedom, recovery and reconstruction. There have been calls in the past to proceed towards the confiscation of these immobilised assets. This is being discussed with Member States and with our international partners currently. The Commission remains open to discuss any legally and financially sound options to continue pressuring Russia to stop its war of aggression. At this stage, the Commission's priority is to operationalise the G7 ERA loans and to make available funding to Ukraine.