EC may transfer first payments from immobilized Russian assets to Ukraine in July

That's according to a press release posted on the website of the European Commission, Ukrinform reports.

"I welcome the formal decision taken today in the Council which will allow the extraordinary revenues from assets of the Russian Central Bank immobilized under sanctions following Russia's war of aggression against Ukraine, to be used to the benefit of Ukraine. The EU has chosen a way forward that is legally sound, and flexible so that support can adjust to Ukraine's most pressing needs," the European Commission's Executive Vice President, Valdis Dombrovskis, said.

According to him, speed remains of the essence and the Commission will continue making all efforts to allow the first payment to be made already in July.

The decisions will enter into force after their publication in the Official Journal.

Resources will be available to support Ukraine starting from July 2024, with bi-annual payments.

While the Ukraine Facility provides opportunities to support emergency rehabilitation, recovery and reconstruction, Ukraine's most pressing needs in defense can be met through the European Peace Facility (EPF), and, once adopted, the European Defense Industry Program (EDIP). In 2024, 90% will be devoted to the supply of military equipment through the assistance measures funded under the EPF and 10% for the EU budget. Within the share for the EU budget in 2024, the full allocation will be devoted to the Ukraine Facility.

The decisions allow prioritization of needs that are likely to shift over time. The distribution will be reviewed annually with the first review by January 1, 2025.

On May 21, the General Affairs Council made a formal decision on the Commission's and High Representative's proposal to use the proceeds from immobilized Russian assets for Ukraine.

After Russia launched its illegal invasion of Ukraine, the international community prohibited any transaction related to the assets and reserves of the Central Bank of Russia. As a result, EUR 260 billion of Central Bank of Russia assets worldwide are "immobilized" with more than two thirds of them in the EU (about EUR 210 billion).  Depending on interest rates, revenues generated from these immobilized assets are likely to yield around EUR 2.5-3 billion a year for the benefit of Ukraine.

On February 12, 2024, the EU clarified the rules on how the immobilized assets and reserves should be managed and decided that central securities depositories (CSD) holding reserves and assets from the Central Bank of Russia worth more than EUR 1 million should set these revenues apart. Since February 15, 2024, the CSD are not allowed to dispose of the related net profits, or distribute them to shareholders. These revenues are not the property of Russia, and they only accrue because of decision to immobilize these assets. They are subject to national taxation.