September 22, 2023 4:43 am

EU’s latest bid to acquire frozen Russian funds in focus — RT Business News

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European Union leaders are considering implementing a windfall tax on profits generated from over €200 billion ($217 billion) of frozen Russian central bank assets in order to aid Ukraine’s reconstruction, according to sources familiar with the matter. The discussions took place during a summit in Brussels on Thursday, where leaders decided to explore this option despite unresolved issues on how to utilize the sanctioned funds.

As part of its sanctions policy, the EU and its allies have frozen hundreds of billions of euros of Russian central bank holdings, which are expected to generate approximately €3 billion in interest. More than half of these assets are in the form of cash and deposits, with the remaining portion consisting of securities.

Among the various ideas explored, the windfall tax option seemed to be the least problematic, as reported by Bloomberg. However, legal risks remain, and it could potentially be challenged in court since some argue that the interest and profits generated from the funds belong to Russia. Lawmakers have warned that taxing and seizing these windfall profits could be legally complex. Several leaders at the summit expressed similar concerns, recalling the European Central Bank’s previous warning that using the proceeds from the assets could result in official reserve holders turning away from the euro.

An alternative option to create an investment entity that would allocate the funds for Ukraine’s reconstruction was also deemed too complex and legally doubtful. Seizing the assets outright was ruled out as not feasible.

German Chancellor Olaf Scholz addressed the issue, stating, “It’s all terribly complicated, and no one now knows what is even possible and how.”

Discussions about the plans have been ongoing between the EU and the US, with the Biden administration being updated on the progress. These discussions are expected to continue in the coming days and weeks.

It should be noted that Moscow has consistently denounced any seizure of its assets by Western governments as theft and a violation of international law.

In conclusion, European Union leaders are exploring the possibility of imposing a windfall tax on profits generated from frozen Russian central bank assets to support Ukraine’s reconstruction efforts. However, legal complexities and the risk of international repercussions pose challenges to this proposal. Further discussions with the US are expected as the EU seeks to determine the best course of action.

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Original Source: EU’s latest bid to acquire frozen Russian funds in focus — RT Business News

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