EU Council: Profits from immobilised Russian assets can be used for defence and reconstruction of Ukraine (updated)

The Commission welcomes the formal decision taken in the General Affairs Council on the Commission’s and High Representative’s proposal to use the proceeds from immobilised Russian assets for Ukraine.

Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “I welcome the formal decision taken today in the Council which will allow the extraordinary revenues from assets of the Russian Central Bank immobilised under sanctions following Russia‘s war of aggression against Ukraine, to be used to the benefit of Ukraine. The EU has chosen a way forward that is legally sound, and flexible so that support can adjust to Ukraine‘s most pressing needs. Speed remains of the essence and the Commission will continue making all efforts to allow the first payment to be made already in July.”

Vice-President for Values and Transparency, Věra Jourová, said: “Today‘s decision marks a significant step forward in our unwavering support for Ukraine. This initiative not only aids Ukraine in its recovery but also underscores our commitment to upholding international law and justice. In 2024 the proceeds from the immobilised assets will primarily support Ukraine‘s military activities to defend itself and to boost its military capabilities, to meet the country’s most immediate needs.” 

Next Steps

The decisions will enter into force after their publication in the Official Journal. Resources will be available to support Ukraine starting from July 2024, with bi-annual payments.

While the Ukraine Facility provides opportunities to support emergency rehabilitation, recovery and reconstruction, Ukraine‘s most pressing needs in defence can be met through the European Peace Facility (EPF), and, once adopted, the European Defence Industry Programme (EDIP).  In 2024, 90% will be devoted to the supply of military equipment through the assistance measures funded under the EPF and 10% for the EU budget. Within the share for the EU budget in 2024, the full allocation will be devoted to the Ukraine Facility.

The decisions allow prioritisation of needs that are likely to shift over time. The distribution will be reviewed annually with the first review by 1 January 2025.

Background

After Russia launched its illegal invasion of Ukraine, the international community prohibited any transaction related to the assets and reserves of the Central Bank of Russia. As a result, EUR 260 billion of Central Bank of Russia assets worldwide are “immobilised” with more than two thirds of them in the EU (about EUR 210 billion).  Depending on interest rates, revenues generated from these immobilised assets are likely to yield around EUR 2.5-3 billion a year for the benefit of Ukraine.

On 12 February 2024, the EU clarified the rules on how the immobilised assets and reserves should be managed (“Step 0”) and decided that central securities depositories (CSD) holding reserves and assets from the Central Bank of Russia worth more than EUR 1 million should set these revenues apart (“Step 1”). Since 15 February 2024, the CSD are not allowed to dispose of the related net profits, or distribute them to shareholders. These revenues are not the property of Russia, and they only accrue because of decision to immobilise these assets. They are subject to national taxation.