So the EU bureaucracy seems to be blocking the use of the $330 billion in immobilised Russian central bank assets in Western jurisdictions. They seem to have come up with a smoke and mirrors approach, which involves only the use the profits on the interest earned on these assets.

I think this is just a PR stunt to deflect from the fact that the underlying assets are being ring-fenced - Europe seems to prefer to spend Western tax payers/creditors/pensioners money funding the annual $100bn cost of the war in Ukraine, rather than do what is morally and politically/strategically right in allocating the underlying assets - and making the Russian tax payer pay.

Actually the legal arguments against are weak, and outweighed by the moral/strategic priority - If Ukraine is not allocated these assets it is underfunded in the war, and loses the war, at a huge cost to Ukrainians and actually Europe. Our European leaders don't seem to do longer term national security strategy, and have constantly mis-calculated on Russia policy. They are doing so again.


Just looking at the numbers though, a weight of Russian CBR assets are in Belgium, at the depository, Euroclear. Indications are that it is sitting on as much as EUR170bn in these underlying immobilised assets.

Euroclear usefully reports IFRS accounts for 22 and 23, whereupon it shows a EUR794m contribution from Russian sanctions to its underlying profit in 2022, and EUR4339m in 2023. It reports it then paid tax of EUR197m on these Russian sanctions related profits in 2022 and EUR1.1bn in 2023 to the Belgian state.

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As I understand it, the EU has decided to allocate taxes on the profits from the above immobilised Russian assets to Ukraine from 2024. This begs the question as to what happens for the monies above for 2022-23?

Surely if Belgium/Euroclear get to keep the above, both will be subject to claims of war profiteering.

Notable here that, according to Ukrainian MOF data, for 2022-23, Belgium allocated just EUR8m to budget support to Ukraine, so that looks like Belgium was a net beneficiary from the war of a staggering EUR1274 million. What is happening to that money?


Perhaps we should also ask what profits Euroclear made on its business in the prior decade, at least to the Russian annexation of Crimea in 2014. Whats the ESG angle for Euroclear in running that business, when actually the track record of Russian malign action was already clear - annexation of Crimea, invasion of Donbas in 2014, Litvinenko, Skyrpal, cyberttacks on the West, Navalny, et al, et al? Perhaps it would like now to do a mea culpa by allocating these profits to Ukraine. What was Euroclear's ESG assessment of Russia over this period? Does Euroclear have an ESG policy?

It is also perverse in my mind that decisions around the use of immobilised assets of the CBR in Western jurisdictions are apparently being made in Belgium, which as above, seems to have something of a vested interest in terms of relations with Russia. The decisions herein on the use of immobilised Russian assets should be taken on the basis of broader Western security interests, and by G7 powers, and not subject to veto by Belgium.


Also, if there is EUR5bn sitting in Belgium on profits/taxes earned on immobilised Russian assets for 2022-23, on just EUR170bn of the total, there is likely to be similar amounts in other Western jurisdictions given the total of $330bn of CBR assets as noted above. How about allocating these monies from 2022-23 to Ukraine, and not just the sums earned from 2024. This might suggest an additional sum of up to EUR10bn could be made available for Ukraine.

The IMF currently talks of burden sharing in respect to support for Ukraine, and is looking for a $14.8 billion financing contribution from private sector creditors (pensioners), but it would be only fair and just to have Belgium, and the other depositories of immobilised Russian assets make their fair share of the contribution, as a starting point, the EUR10bn or so earned on these assets for 2022-23, when Ukraine was subject to invasion. But also at least since the annexation of Crimea in 2014.

But ultimately the Russian tax payer should pay thru the allocation of the underlying $330bn in CBR assets sitting in Western bank accounts for the $500bn plus in estimated damage to Ukraine. I mean how do our politicians think it is fine to tax their own electorates to pay for the war while in effect ring fencing Russian tax payers money. We are clearly idiots if we allow this to continue.


Reprinted from the author’s @tashecon blog! See the original here.

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.

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