EU floats idea for using Russia's frozen assets that would ease Belgium's concerns

Europe has put forward a new proposal for using Russia's frozen assets to support Ukraine, seeking to address Belgium's concerns over the legal risks it could face from such a move.

Source: an article by European Pravda; Heorhii Tykhyi, spokesman for Ukraine's Ministry of Foreign Affairs in a comment to European Pravda

Details: One of the alternative approaches to using Russia's frozen assets to support Ukraine, currently being discussed within European expert circles, is to change not only how Russian money is used, but also where it is held and which institution is responsible for its custody.

This concerns the possibility of moving Russian assets out of the Euroclear depository in Belgium and entrusting them to a new custodian under EU control.

This idea also has Ukraine's support – Ukraine's Ministry of Foreign Affairs says it has passed on to Brussels its own vision of how this could be implemented.

Quote from Tykhyi: "Ukraine's Ministry of Finance has already put forward a specific proposal to the European side. It concerns creating an EU-level mechanism to which these funds could be entrusted. The decision on their actual use for Ukraine's defence, resilience and recovery needs would then be made collectively, with distributed responsibility across all EU member state governments."

More details: If a new EU structure or banking institution replaces Euroclear as custodian, legal responsibility, along with the Russian funds, could shift to the pan-European level. In that case, it would be the EU, not Belgium, that would have to respond to lawsuits or demands for the return of funds, which would broadly address the concerns the Belgian government has cited in its objections to the reparations loan.

However, for now, the EU views this idea as a theoretical possibility rather than a ready-made plan.

A legal and financial mechanism for the transfer that would remove the risks from the Belgian government has not yet been worked out; accordingly, there is also no draft legislative proposal from the European Commission.

To determine whether the idea is feasible and politically acceptable, the European Commission would need to set out a legal basis for transferring the assets, choose or propose a financial structure to manage them, define the instrument's model, rules and governance arrangements and clarify how any potential losses or liability would be shared if courts were to rule in Russia's favour.

Background: The Parliamentary Assembly of the Council of Europe (PACE) has proposed a way to transfer frozen Russian assets to Ukraine on the basis of two rulings by the European Court of Human Rights.

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