West proposes EU custody of frozen Russian assets for Ukraine

A group of Western policymakers has proposed transferring frozen Russian sovereign assets held in Europe to a new European Union-controlled depository, in a bid to facilitate their use in support of Ukraine.

The initiative was put forward by Annegret Kramp-Karrenbauer, Nathalie Loiseau and Dalip Singh. Their joint statement, reported by Frankfurter Allgemeine Sonntagszeitung, calls for a structural shift in how frozen Russian assets are managed.

They argue that “the European Union should immediately transfer custody of the frozen accounts of the Russian Central Bank to a new EU depository organisation,” which would assume responsibility for administering the funds. Under the proposal, the EU would effectively become the custodian, while ownership would formally remain with the Central Bank of Russia.

The authors stress that “this does not involve confiscation, since the Central Bank of Russia would remain the owner of the accounts after the transfer into custody.”

They say the plan would relieve legal and political pressure on Euroclear and Belgium, while helping to “eliminate legal and financial doubts” over deploying the funds for Ukraine’s benefit.

The proposal also cites a historical precedent, noting that a similar mechanism “already took place after the overthrow of Iraqi President Saddam Hussein, when Iraqi state assets held abroad were transferred for safekeeping to the Federal Reserve Bank of New York,” referencing the period following the removal of Saddam Hussein.

The authors urge swift action, warning that a €90 billion EU loan to Ukraine could be depleted by 2027 and that the “window of opportunity” may narrow if governments less supportive of military assistance to Ukraine come to power in EU member states, particularly France.

The European Union and Group of Seven have frozen roughly €300 billion in Russian assets since the start of the conflict. Around €180 billion of those funds are held at Euroclear.

The European Commission is seeking consensus among member states on mechanisms to use the assets for Ukraine, after earlier efforts to agree on a “reparations loan” backed by frozen Russian funds failed.

By Tamilla Hasanova