Use of proceeds from frozen Russian assets possible - Council of EU document

BRUSSELS. Feb 12 (Interfax) - The Council of the European Union adopted a document on Monday, explaining the obligations of the central securities depositaries (CSDs) possessing the Russian Central Bank's assets and reserves frozen in consequence of EU restrictive measures.

"This decision paves the way for the Council to decide on a possible establishment of a financial contribution to the EU budget raised on these net profits to support Ukraine and its recovery and reconstruction at a later stage," the document, published in Brussels, said.

"The EU, in coordination with international partners, decided to prohibit any transactions related to the management of reserves as well as of assets of the CBR [Central Bank of Russia]," it said.

As a result, those assets, held by financial institutions in EU member states, became "immobilized," it said.

"Today's decision, in line with G7 position, clarifies the prohibition of those transactions as well as the legal status of the revenues generated by the CSDs in connection with holding of Russian immobilized assets and sets clear rules for the entities holding them," the document said.

"CSDs holding more than one million euros of CBR's assets must account extraordinary cash balances accumulating due to EU restrictive measures separately and must also keep corresponding revenues separate," it said.

The document also bans depositaries from disposing of net proceeds.

This financial contribution could be directed, through the EU budget, to the Ukraine Facility, on which the EU's Council and parliament reached preliminary agreement on February 6, 2024.

Extraordinary revenues, held by private organizations and received directly from immobilized Russian sovereign assets, should be directed for Ukraine's support, the G7 leaders said in a statement on December 6, 2023.

The process of deciding, in coordination with partners, on how such extraordinary revenues could be directed for Ukraine's support, recovery and reconstruction should be expedited, the European Council said in its conclusions of December 14-15, 2023.

Around 260 billion euros worth of CBR assets were immobilized in the form of securities and monetary assets in the jurisdictions of G7 and EU partners and Australia; more than two-thirds of them, in the EU.

The assumption is that after devising, jointly with G7 partners, a mechanism for seizing extraordinary revenues from Russian assets, the EU would be able to realize the means set aside in Ukraine's interest.