The European Commission has invented a “legally creative” way to transfer frozen Russian assets to Ukraine: what does the plan entail?

The European Commission has come up with a new way to transfer billions of euros in frozen Russian assets to Ukraine. In particular, Europe is proposing to replace the money with EU-backed debt obligations.

This was reported by Politico.

The new proposal could free up a significant stream of additional funding for Ukraine’s military needs. One official called the plan “legally creative.”

The plan has already been proposed to deputy finance ministers behind closed doors in Brussels, four officials familiar with the matter said. It has generated “cautious enthusiasm” but no agreement has been reached.

According to one source, an official proposal may be announced in the near future.

The European Commission believes it can avoid accusations of confiscation by exchanging cash for short-term zero-coupon EU bonds. This would allow the EU to help Ukraine without technically expropriating the Russian assets themselves, which would be legally risky.

Under the rules, any assets that are due for repayment and held by Euroclear must be transferred to a deposit account at the European Central Bank, which in turn pays interest on the money held.

Until now, the European Union has used the interest received to repay its share of the G7 loan for Ukraine of 45 billion euros.

However, now that Ukraine is running out of money, the EC is proposing to use cash deposits in the ECB to finance the “Reparation Loan.”

“To appease Euroclear, the Commission proposed exchanging asset-linked cash deposits for zero-coupon bonds that would be jointly guaranteed by EU countries,” the material says.

However, this approach has many obstacles, not least because national guarantees require unanimity, the journalists added.

Earlier, Ukraine received another tranche of financial assistance from the European Union in the amount of 1 billion euros. The funds came from the proceeds of frozen Russian assets and are part of a large-scale G7 initiative to support Ukraine.

It has been reported that the European Commission is working on creating a special fund that could attract almost 200 billion euros in frozen Russian assets . These funds are planned to be used to support the post-war reconstruction of Ukraine.

Instead, Hungary filed a lawsuit with the Court of Justice of the European Union against the Council of the EU over its decision to use frozen Russian assets to finance aid to Ukraine.

By the way, Belgium also does not agree to the confiscation of frozen Russian assets stored in its banks.

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