BRUSSELS: The EU has reached an agreement on a first step towards tapping profits from frozen Russian assets to help pay for rebuilding war-ravaged Ukraine, officials said.
EU ambassadors agreed on a plan to set aside the profits from the assets in order for them to eventually be used to help pay for Ukraine's reconstruction, the Belgian presidency of the European Union said on X, formerly Twitter.
The agreement moves forward a long and legally fraught debate about how to use Russian state assets that were blocked by Western institutions immediately in the wake of Moscow's all-out attack of Ukraine nearly two years ago.
The EU has frozen some 200 billion euros of Russian central bank assets, with about 90 per cent of those funds held by the international deposit organisation Euroclear, based in Belgium.
Simply confiscating all that money and giving it to Ukraine's reconstruction efforts is not seen as an option, as that could rattle international markets and undermine the euro.
Some countries, notably Belgium, had proposed a windfall tax on the frozen funds that could generate some three billion euros a year for Kyiv.
The European Commission made a cautious proposal that was put to all 27 EU member countries under which deposit holders like Euroclear would first have to separate interest or profits earned on the frozen assets and ring-fence them.
A second proposal was to be put forward later on how the ring-fenced profits could then be shifted into a fund that would go to Kyiv.
Lithuania's ambassador to the EU, Arnoldas Pranckevicius, called the overnight preliminary agreement a "very important and long awaited decision".
But, he said on X, it was "only the beginning of the road," adding: "Now looking forward to the 2nd step proposal from the European Commission on the use of profits for reconstruction of Ukraine and the start of discussion on confiscating assets themselves."
The United States wants a collective G7 decision on how to tap the Russian money.
Diplomats say Washington is increasingly in favour of outright confiscation of all frozen Russian funds, but that the Europeans have pushed back on that.
The movement on the frozen funds issue comes at an otherwise difficult time for Ukraine as continued Western support runs into political headwinds. — AFP
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