On 14-15 December, the EU's plan for transferring profits from frozen assets of the Russian Central Bank to Ukraine was discussed during the European Council meeting .

This idea, voiced by Ursula von der Leyen back on November 30, 2022, has been given a chance to be put into practice for the first time.

Oddly enough, the problems with the allocation of financial support to Ukraine only increase the likelihood of a positive decision by the EU on this issue. And this will be a huge victory, even though the EU decision will not concern the confiscation of these assets. 

Read more in the article by Ivan Horodyskyy, Ph.D., Director of the Dnistrianskyi Center – Russian Money to Support Ukraine: What EU Plans to Do with Proceeds of Russian Assets

The fate of the frozen billions of the Russian Central Bank, as well as the profits accumulated from their use, is one of the most discussed and difficult topics for Brussels.

There is no consensus on this issue even among the key EU bodies: the European Parliament calls for their confiscation and use in the interests of Ukraine, the European Commission advocates their use or taxation and transfer of the proceeds to Ukraine, and the European Central Bank is strongly opposed to any of these options.

In the afternoon of December 15, the European Council released the conclusions of its meeting, probably one of the most dramatic in history. 

In clause 6, EU's most influential body calls for active action to use the excess profits from Russian assets to help Ukraine "in accordance with international law and EU law."

Instead, a legal framework will be developed that will allow institutions that control frozen Russian assets (e.g., Euroclear Bank) to decide on the fate of the accumulated profits from these assets.

The second important point is the purpose of using these profits.

The European Council's statement refers to "support for Ukraine, its recovery and reconstruction."

And even more important here is the clause contained in the so-called "Negotiating Box" on a multi-year financial program to support Ukraine for 2021-2027. It says that €17 billion of the €50 billion in aid to Ukraine for 2024-2027 should be filled, among other things, by using the proceeds of frozen Russian assets.

Both provisions are currently only hypotheses, which may not be reflected at all in the final decision that may be adopted at the extraordinary summit of the European Council.

On December 15, Deputy Head of the Office of the President, Rostyslav Shurma said that the proceeds from frozen Russian assets "at the current level of interest rates in the world could reach $15 billion annually," noting that they would be a support for the state budget, financing of the economy and citizens as long as the fight against Russian aggression continued.

This estimate is probably too hasty: according to the Financial Times data, it could be as much as €3 billion a year or €15 billion over four years.

However, regardless of the amount, it should be borne in mind that the funds that were supposed to be used to compensate for the damage caused by the aggression would be used to finance current needs.

Moreover, these funds will be used not as additional support but as part of the overall financial support from our allies.

This turnaround was not surprising, given the slowdown in US aid, Hungary's blocking of the €50 billion plan, and the German budget crisis.

It is impossible to predict how much of these revenues will be transferred to Ukraine and when.

And lastly, no matter how large these revenues are and no matter how painful it is for Russia, this is not a step that clearly brings us closer to our main goal – the confiscation of the assets of the Central Bank of the Russian Federation.