The first money from frozen Russian assets: two ways to get it
24 June 2024 15:10
ЕКСКЛЮЗИВ
The European Union’s High Representative for Foreign Affairs and Security Policy, Josep Borrell, said that next week the EU would allocate the first part of the €2.5bn in proceeds from frozen Russian assets to support Ukraine. Borrell said this before the meeting of EU foreign ministers in Luxembourg, reports
Borrell noted that the EU should look for a way to use the frozen Russian assets, avoiding any blocking by member states.
“And we have a legal procedure to avoid any blockages. The first tranche of money will come next week, in July. The second one will come a few weeks later,”
– Borrell added, specifying that the first part of the €2.5bn will be disbursed next week to support Ukraine.
The EU’s top diplomat said that the recent Peace Summit in Switzerland “opened a diplomatic path” to ending the war, but Putin responded by “travelling wherever he can get weapons”.
Valeriy Klochok, head of the Ukrainian Centre for Public Analytics “Vezha “, commented
“I don’t know what he (Borrell – ed.) meant, and frankly, for one reason: on 12 June, the President of the European Commission Ursula von der Leyen made a statement that Ukraine would receive in July 1.5 billion euros of income from the frozen assets of the Russian Federation, which are placed … in which country – I am not ready to comment, because she did not specify it. Perhaps it is Belgium, perhaps in general. And this is income from assets. When Borrell talks about a part of the 2.5 billion… Is it a loan that will be repaid from the proceeds of Russian assets or something else? I’m not ready to tell you right now, because we may be talking about a $50bn loan that will be issued by a number of G7 countries, including Japan, someone from the EU – there hasn’t been any precise information yet, maybe even the US,”
– he said.
According to him, no one is talking about confiscating the body of Russian deposit accounts.
“There was a discussion about who would actually provide this loan, but it will be repaid with the proceeds of income – specifically, the income of Russian assets. No one is talking about confiscating the actual body of Russian deposit accounts. That is, there is no question of that. We are talking exclusively about income,”
– he added.
Valeriy Klochok explained that there are two ways to receive money from Russian assets.
“There are two ways to receive the money: in the pure version, as Ursula von der Leyen said, but it was about 1.5 billion, and we should receive this money in July, or a loan. I think we will find out what Borrell meant in the near future. In any case, we will receive this money, and yes, indeed, this amount of 50 billion is important to us, because it will partially come this year. Not all the money will come, that’s for sure,”
– the expert said.
According to him, this amount will most likely be equivalent to our state budget deficit, which is about $30-40 billion, according to various estimates.
“Indeed, we need this money to cover the deficit. Next year’s deficit will be the same, so it’s not worth saying that this is some kind of unimaginably large money for Ukraine. But this is really good support for us to feel more or less financially stable. And this was a big problem for Ukraine, although it was said that you can partially, that is, we can find this money ourselves from ensuring transparency in the work of individual fiscal authorities, such as customs, tax, and everything else. “,
– he said.
The head of the Ukrainian Centre for Public Analysis “Vezha” noted that Ukraine will not receive any additional money from ensuring transparency of the work of individual fiscal authorities.
“The tax authorities work according to a different scheme – they squeeze out the customs, and the customs simply does not count, but also squeezes out. But it seems that the ball is still in the court of law here, and the Ukrainian authorities are unlikely to act in a way that is different from how they acted in previous decades. It’s a hereditary thing here: the faces of power change, but the schemes work the same way,”
– klochok said.
According to him, the scheme for placing domestic government bonds, which for some reason were called military bonds, is working very well in Ukraine.
“Given the challenges, we are borrowing some money on the domestic market and on the foreign market – we are talking about restructuring, but the situation with regard to financial stability in Ukraine is extremely shaky. Because we have claims from our creditors for repayment of our previous debts, and the fact that this money will be forthcoming – I want to tell you that the authorities have nothing to report that there is a lot of money there. It came and went as it came. Our obligations are huge, and even this money will not fully cover our needs in the revenue side of the budget, because we have huge obligations,” he explained,
– he explained.
The expert noted that the overall debt amount has not increased much.
“It has increased by about 25-30 billion. This is not a catastrophically high figure. Of course, it will grow, the pace is normal, if we stay within 60-70% of GDP, this is a super indicator for the world, and this is no exaggeration, because other countries have much larger debt obligations,”
– he said.
Klochok said that Ukraine has lost profits and direct losses.
“The lost profit is because in 2014, due to the outbreak of the war in Ukraine, the annexation of Crimea, and the temporary occupation of the Donetsk and Luhansk regions, we lost industrial capacities that allowed us to produce more GDP. This can also be counted. And of course, there are direct infrastructure losses. Since the beginning of the large-scale invasion, according to various estimates, such as those of the Kyiv School of Economics, the figures look a bit strange. Because from the beginning of the invasion, it was clear that our losses were about $500 billion, but if they are talking about direct infrastructure losses in the range of $100-150 billion today, yes, it may be, but we need to understand who is counting and how,”
– he said.
The head of the Ukrainian Centre for Public Analysis “Vezha” stressed that the money that Europe is promising us today through frozen assets does not even begin to cover the damage that has been caused by the Russian occupation and war.
