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Germany supports US plan for using frozen Russian assets for Ukraine – Bloomberg

21 May, 2024 Tuesday
14:25

Germany backs the US plan to use frozen Russian assets to fund Ukraine, aiming to secure up to $50 billion in credit through asset income

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Bloomberg reports this.

The latest US proposal has been well-received in Europe, including Germany, as it focuses on using the interest from the assets, not the principal amount.

Germany's agreement could help the US and its allies secure a significant aid package for Ukraine, ensuring US participation regardless of the November elections. Sources say aid could total $50 billion.

The US proposal is gaining momentum and is set to be a key topic at the G7 finance ministers and central bank governors' meeting in Stresa, Italy, starting Thursday, May 23, according to US and EU officials.

However, a final agreement is not expected until the G7 leaders' meeting on June 13-15, with implementation likely next year, sources said.

EU countries have already agreed to tax the income from Russian assets at nearly 100% and transfer the funds to Ukraine twice a year. The G7 agreement would replace this arrangement.

These assets are expected to generate around €5 billion annually. The current proposal suggests the G7 would estimate future revenue and provide that amount to Ukraine in advance.

What is known about the confiscation of Russian assets

On November 30, the US Senate introduced a bill to confiscate Russian assets. By January 11, the Biden administration backed the idea, supporting the transfer of Russian Federation assets to Ukraine.

Russia warned that confiscating its frozen assets could cost the West at least $288 billion in lost assets and investments. Moscow also threatened retaliation.

On January 23, Belgium's ambassador to the US stated that Western countries should collectively decide on confiscating frozen Russian assets, most of which are held in Brussels' Euroclear.

The next day, the US Senate committee approved a bill to confiscate Russian assets and transfer them to Ukraine.

By January 30, the Committee on Political Affairs of the Parliamentary Assembly of the Council of Europe adopted a draft resolution to confiscate frozen Russian assets and allocate them to a fund for Ukraine's restoration.

Europe holds €191 billion of Russia's €260 billion in frozen foreign assets. The €4.4 billion profit from these assets in 2023 is intended for Ukraine.

On February 12, the Council of the EU decided on a mechanism to use profits from frozen Russian assets in the EU for Ukraine.

On May 7, German Chancellor Olaf Scholz supported using about 90% of profits from frozen Russian assets for Ukraine's defense needs.

Finally, on May 8, EU ambassadors agreed to direct revenues from frozen Russian assets to Ukraine’s reconstruction and defense against the aggressor.

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