Ukraine, page-7589

“..According to the European Council, the bloc has set up the so-called Ukraine Facility for the period 2024-2027 to “contribute to the recovery, reconstruction and modernization of the country..”

• Good Money After Bad: Where Will EU Funds for Ukraine Come From? (Sp.)

European Union (EU) member states have agreed on a €50 billion ($54 billion) support package for Ukraine over four years, overcoming Hungary’s resistance. But where will the EU get that money? The EU could commandeer interest paid on frozen Russian assets to fund Ukraine during its war with Moscow. Europe’s economy is facing stagnation, with zero economic growth for October-to-December period reported by EU statistics agency Eurostat. The Eurozone inflation rate has yet to fall below the target two percent threshold, with consumer prices still remaining high. Against that backdrop EU member states are cutting subsidies, reducing energy consumption and diminishing industrial production. Protests by farmers have rocked the continent since early January. Nonetheless, Brussels has found €50 billion ($54 billion) to support the embattled Kiev regime for four more years. But where will this money come from?

According to the European Council, the bloc has set up the so-called Ukraine Facility for the period 2024-2027 to “contribute to the recovery, reconstruction and modernization of the country, foster social cohesion and progressive integration into the Union, with a view to possible future Union membership.” To that end the EC has allocated €50 billion, of which: • €33 billion ($35.9 billion) comes “in the form of loans guaranteed by extending until 2027 the existing EU budget guarantee, over and above the ceilings, for financial assistance to Ukraine available until the end of 2027,” the document sets out. • €17 billion ($18.5 billion) comes “in the form of non-repayable support, under a new thematic instrument the Ukraine Reserve, set up over and above the ceilings of the MFF 2021-27.” The EC document specifies that revenues “could be generated under the relevant Union legal acts, concerning the use of extraordinary revenues held by private entities stemming directly from the immobilized Central Bank of Russia assets.”

On February 1, CNN claimed that the EU had taken a step towards seizing billions of dollars in interest payments generated by Russian assets frozen in European accounts. Media reported that roughly €200 billion ($218 billion) remain in the EU, mainly in Euroclear, a Belgium-based financial services company. The media outlet highlighted that the EU approved the €50 billion Ukraine package as it “came closer to finalizing a plan” of using the profits from the Russian Central Bank’s sequestred assets — indicating that it has yet to gain access to the funds. Euroclear revealed on Thursday that the frozen Russian assets had yielded €5.2 billion ($5.6 billion) in interest on income assets since 2022.

On Monday, EU member states “agreed in principle” that profits from the Russian assets will be set aside and not be paid out as dividends to shareholders until the bloc’s members decide to set up a “financial contribution to the [EU] budget that shall be raised on these net profits to support Ukraine”, according to a draft document quoted by Euroactive. The document claimed that the levy will be “consistent with applicable contractual obligations, and in accordance with [EU] and international law.” After that the EC would transfer the money to the EU’s accounts and then to Ukraine, the media noted, specifying that the proposal targets future profits and would not be applied retrospectively. It is believed that Russia’s frozen assets in the EU could generate an estimated €15-17 billion over four years, which would be transferred to Ukraine, according to the press.

Speaking to Sputnik last October, Jacques Sapir, director of studies at the School for Advanced Studies in the Social Sciences (EHESS) in Paris, argued that any attempt by the EU to grab Russia’s frozen assets or revenues from them could turn into a legal nightmare for the EU leadership and particular member states where the money is being stored. “As a matter of fact, if assets belong to the Russian state legally, you will have to prove that this state is a ‘failing state,’ something impossible,” Sapir told Sputnik on October 29, 2023. “If assets belong to private persons, you need a legal conviction against these persons. If you can’t do both and that you take away revenues to divert them to a third party (Ukraine) this is no less than a theft. Then you will be liable to legal action. But, what is even more important, you will probably discourage all foreign investors from investing in the EU.”

Read more …