11/10/23

EU: US backs EU windfall tax on frozen Russian assets

As published on: euobserver.com, Wednesday 11 October, 2023.

In her strongest wording on the subject yet, US treasury secretary Janet Yellen said she supported a European proposal to use the hundreds of billions of seized Russian assets currently held by G7 countries.

"I also support harnessing windfall proceeds from Russian sovereign assets immobilised in particular clearing houses and using the funds to support Ukraine," she told reporters at a press conference in Marrakech on Wednesday (11 October).

Speaking at the start of annual meetings of the International Monetary Fund and the World Bank, she added that "we must continue to impose severe and increasing costs on Russia and continue efforts to ensure that Russia pays for the damage it has caused."

Currently, more than €200bn in Russian assets sit in clearing houses such as the Belgium-based Euroclear, which has already earned €1.5bn in interest over the €141bn it currently holds, in part due to proceeds gained from reinvesting those funds.

The European Commission has discussed options to transfer interest income to Ukraine to support the war effort. But so far efforts have been bogged down by legal uncertainty and political disagreement.

France and Germany have both resisted EU plans to tax the frozen assets, while European Central Bank president Christine Lagarde warned that it could undermine the Eurozone's financial stability.

In March, a joint report by Kyiv, the European Commission, the World Bank, and the United Nations estimated that rebuilding infrastructure in the war-torn country will cost €400bn.

EU officials have estimated that the windfall profit from Russia's frozen assets in Europe could provide €3bn a year to rebuild Ukraine.

Yellen's comments come as US financial aid to Ukraine is increasingly subject to political wrangling and bickering.

Speaking alongside Nato chief Jens Stoltenberg during a surprise visit to Brussels on Wednesday, Ukrainian Volodymyr Zelenskyy said that Ukraine "needs some support from the leaders. That is why I'm here today."

Last week, EU foreign ministers had already travelled to Kyiv to dispel rumours that EU and US support is wavering.

Yellen, on Wednesday, seemed to do the same. "I want to be clear that we cannot allow our support to Ukraine to be interrupted," she said.

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Europe EU Russia US