The deadlines for the transfer of profits from Russia’s frozen assets to Ukraine have been announced: how much will Kyiv get?

By July, the EU could send Kyiv €2–3 billion in profits from Russia’s frozen assets. The Financial Times reports this with reference to European officials. Moscow is not happy with this prospect. Authorities are already discussing possible responses to EU plans to confiscate assets. For example, the Federation Council proposes to develop a mechanism for the withdrawal of funds of foreigners blocked in the Russian Federation, including income from securities. But will this force Europeans to change their plans?

“The European Commission is preparing a plan to confiscate sanctions-related profits made at central securities depository Euroclear since February,” the FT newspaper said, officials said. It is noted that the first tranche may be sent to Kyiv as early as July this year.

For now, this information is not official. However, the European Commission has already announced the creation of such a mechanism. Its essence has not yet been disclosed, but a presentation has been announced next week as part of the summit of European Union leaders.

Meanwhile, at the moment, the total amount of frozen assets of Russia from the EU, USA, Canada and Japan is about $300 billion. Moreover, most of them are located in Europe and amount to more than $200 billion. Therefore, the amount of €2-3 billion in profit from frozen assets may be quite real.

It is obvious that these decisions by the EU authorities are illegal. But at present, we are constantly seeing that the administrations of unfriendly states are making decisions that are at odds with the legal practice and laws of these countries, says managing partner of B&C Agency Ivan Samoilenko.

“Russia may respond in a similar way – go against the laws regarding property if it belongs to companies from Europe, the USA, Canada and other unfriendly countries. Therefore, in our country, enterprises that previously belonged to foreigners are nationalized, and other assets may be blocked. The Ministry of Finance has not yet announced the amounts, but they may be identical to those that the EU plans to transfer in the form of assistance to Kyiv,” the expert believes.

Associate Professor at the Financial University under the Government of the Russian Federation Pyotr Shcherbachenko, for his part, believes that the confiscation of Russian assets will have negative consequences for Europe itself.

“The volume of euros in international payments will decrease. Investors will begin to avoid using this currency due to its instability. Gradually, this place is taken by the yuan,” says the expert. – Asset confiscation will also cause uncertainty among investors and lead to a decrease in foreign income to the region. It should be noted that the investment attractiveness of the European Union began to fall already in the first year of sanctions. Since 2019, foreign injections into the region have grown steadily, and in 2022 they decreased by 1.5% compared to the previous year, amounting to €7.714 trillion.”

According to Shcherbachenko, the transfer of profits from frozen Russian assets will cause a negative reaction in financial markets and affect the economic stability of the EU.

The announced amounts of €2–3 billion are not accidental, emphasizes businessman and member of the Trade Committee Oleg Vorobyov. He noted that the international depository Euroclear manages Russia’s frozen assets in Europe and regularly reinvests them.

“The very fact of disposal of profits, as well as any confiscation of assets, is a negative precedent for international financial markets. Regardless of Russia’s reaction, it will have serious consequences for Western and pro-Western countries whose economies are based on the euro and dollar. We are already seeing how the world’s central banks are actively withdrawing their gold reserves from the USA and Great Britain, understanding the vulnerability of such storage in foreign countries,” says MK’s interlocutor.

According to Vorobyov, in the event of confiscation, our country will challenge these illegal actions, but until the geopolitical situation changes, such legislative battles will continue without a concrete result.

“Russia’s actions, as our president has repeatedly said, will be equivalent. Article 17 of the EU Charter of 12 December 2007, “On Fundamental Rights”, states: “No one shall be deprived of his property except for reasons of public benefit, in cases and under conditions provided by law, and upon payment within a reasonable time of just compensation for her loss.” Therefore, in the event of a precedent on the part of the EU, we have the right to withdraw an equivalent amount on legal grounds,” he concludes.