New regulations for the transfer of profits from frozen Russian assets to Ukraine are being put into effect under the leadership of the USA. After the United States of America (USA) brought forward the idea of seizing the assets of the Russian Central Bank in violation of international law, it began to force the European Union (EU) to implement the same practice. Because the most important part of the Central Bank of Russia’s assets in the West is in the European Union. The latest evaluation published in the Financial Times revealed the difference between the USA and the EU on this issue.
THERE ARE DIFFERENCES WITHIN THE G7
The USA also carried the discussion to the G7 (Group of Seven) countries, consisting of the USA, Germany, France, England, Italy, Canada and Japan. Financial Times stated that the G7 was “divided in two” on the issue of seizing frozen Russian assets and using them directly: “Washington supports the idea of seizing the entire reserves and giving them to Ukraine, while European officials warn that this idea could violate international law and destabilize financial markets.” is worried. EU countries, on the other hand, prefer that only the profits from the assets in question be given to Kiev.”
“We’re at a point where we need to explore every possible way to maximize the value of dormant reserves for Ukraine,” Daleep Singh, the US deputy national security adviser for international economics who traveled to Kiev last week, said there Wednesday. “We can’t wait forever, we know that.” According to Singh, the US proposal is to release the frozen assets today as a bond or loan, taking into account future interest income.
WHAT WILL HAPPEN IF PEACE IS SIGNED?
US officials said that more could be done by taking advantage of the loophole in the EU’s positive attitude towards “profit transfer”. “Instead of just transferring the annual profit from reserves, it is conceptually possible to transfer 10 years of profit or 30 years of profit,” Singh said. “The present value of these profits amounts to a very large figure.” Singh’s goal is to make a decision on this issue at the G7 leaders’ summit to be held in June.
But officials in a leading EU country have asked what would happen to a bond secured by 10 years of interest payments on seized Russian assets if the war ends within a few years and the assets are frozen and returned to Russia under a peace deal.
THE USA’S EYE IS ON ASSETS IN THE EU
The bulk of the frozen Russian money is in the EU, including around 190 billion euros of Russian central bank assets held at Euroclear, a central securities depository based in Brussels. These assets have generated profits of 3.85 billion euros since the start of the war, and EU countries were discussing using these profits to help Ukraine. A European official told the Financial Times that, based on the interest income expected to be generated from Russian funds in Euroclear over the next 10 years, a bond could generate profits of 30 billion to 40 billion euros, and 50 billion to 60 billion euros in the next 15-20 years. told. But they warned that this largely depends on future interest rates.
According to the newspaper, the EU is also preparing a draft decision on using these revenues for the arming and reconstruction of Kiev, in parallel with the US proposals. However, this draft has not yet been accepted by member states.
The decision was made by the Parliamentary Assembly of the Council of Europe
On April 16, the Parliamentary Assembly of the Council of Europe (PACE), which acts as an advisory body to the Council of Europe, unanimously decided to support a draft resolution calling for the seizure of frozen Russian assets and their use in a new fund for the reconstruction of Ukraine. The resolution specifically called for the frozen assets to be used to support Kiev’s reconstruction efforts. According to World Bank estimates, the reconstruction of Ukraine will cost $486 billion over a 10-year period. Since the decision-making body of the Council of Europe is the Committee of Ministers, and PACE only acts as an advisory body, the decision taken is not yet sufficient to be put into practice by the Council.
Yellen: Our disagreements give hope to Russia
In a statement this week, United States Treasury Secretary Janet Yellen called on the US Congress to urgently approve new military and financial support to Ukraine. Yellen, who also emphasized divisions in the West, said Russia could take courage from internal debates in the United States and elsewhere about continuing aid to Ukraine: “Russia is starting to see signs that the United States and our allies are getting tired or having trouble finding ways to support Ukraine.” I’m afraid it’s starting. “This gives them hope that they can outlast us and wait for our resolve to break.” Yellen also noted that Washington was “very supportive” of the EU’s recent moves to segregate interest income from frozen assets.
‘We will continue to study all possible avenues’
G7 Finance Ministers met in Washington, the capital of the USA, on Wednesday, April 17. In the written statement made after the meeting, the emphasis in the final declaration of the G7 Leaders Summit held on February 24 was repeated. While there are signs that the EU will continue to send some of the revenues from Russian assets to Ukraine; It was once again emphasized that “preparations will be made” for the use of Russian assets in line with the US proposal. On the other hand, no concrete steps were announced:
“We welcome the EU’s proposals to direct extraordinary revenues from Russia’s seized assets to the benefit of Ukraine. “We also welcome the steps taken by the UK and the US to stop the trading of new Russian base metals on global metals exchanges.”
In the statement, it was pointed out that legal preparations for Russian assets will be completed before the G7 summit to be held in Puglia, Italy, on June 13-15. However, the final decision will be made at the summit:
“We reaffirm our determination to ensure that Russia pays for the damage it has caused to Ukraine. Russia’s sovereign entities in our jurisdictions will remain dormant until then, consistent with our respective legal systems. “We will continue to study all possible ways that immobilized Russian sovereign assets could be used to support Ukraine.”
