Germany opposes plan to give profits from frozen Russian assets to Ukraine – Financial Times

Germany has spoken out against the European Commission's plan to give Ukraine profits from Russia's frozen assets, saying that a hasty step could entail legal or financial risks.

Source: Financial Times, referring to sources in the German government

Details: The newspaper writes that the European Commission is working on a plan that could raise billions of euros by requiring financial institutions holding frozen Russian assets to transfer part of their profits to rebuild Ukraine.

However, after concerns were expressed by the European Central Bank, Berlin and other capitals called for further reflection on these ideas.

A German Foreign Ministry official said Moscow "will have to pay for the damage it has caused in Ukraine" and stressed that Germany is doing everything in its power to find and freeze the assets of Russian individuals and companies that are under sanctions. 

But, according to the official, using Russian funds to restore Ukraine raises "complex financial and legal issues".

Another official explained that if the EU takes money from the Russian Central Bank or receives income from investing funds, it will set a precedent for others, such as Poland's claims to receive compensation from Berlin for losses during World War II.

According to another official, Marco Buschmann, the German Justice Minister, has studied EU proposals to confiscate the assets of the Russian Central Bank and concluded that they are legally invalid. 

Sources familiar with the discussions said that at a meeting with the European Commission on Wednesday, several diplomats urged caution, saying that important questions must be answered before a formal proposal is made.

Since the EU and its allies froze hundreds of billions of euros in Russian Central Bank assets following the Ukraine invasion, officials have debated how to use some of that money to rebuild the country.

EU representatives have abandoned the idea of completely confiscating assets and are instead looking for ways to collect part of the proceeds for Kyiv. 

One option is for securities depositories to be required to make a surplus profit contribution from the profits generated by reinvesting the proceeds from these assets.

Background: The government of Estonia has approved the principles of using Russia's frozen assets to support Ukraine. 

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