JRL NEWSWATCH: “Don’t seize: capitalise; How to put Russia’s frozen assets to work for Ukraine; Exploit them to the full, but legally” – The Economist
“… About €190bn of [Russian] assets are controlled in Belgium by Euroclear, a custodian. … [I]nvestment returns and principal repayments it would pass on to Russia are instead piling up as a cash balance … currently … around €132bn … which Euroclear’s bank can profitably invest. The argument that Russia has no right to these returns is relatively uncontroversial, not least because Euroclear does not usually pay interest on cash holdings. The free funding is helping Euroclear make extraordinary profits. The EU has … ordered the firm to hive them off and not … distribute … to shareholders … [European Commission President] Ursula von der Leyen … [has raised the prospect of sending] the money … to Ukraine. .. The EU could … launch and guarantee a vehicle whose debts are serviced using the income from Russia’s funds. By issuing bonds, this vehicle could raise a large upfront amount … sent … to Ukraine. Investing the €132bn cash balance in five-year German debt would yield about €3.2bn per year … to service almost €114bn of joint EU debt at the same maturity. The figures would rise as more of Russia’s portfolio vests into cash. Such large amounts would … pay for ammunition now and signal to Russia that Ukraine has the economic staying-power to carry on the war. If Russia never made peace on satisfactory terms, the EU would never have to spend a penny of its own money …. Ukraine would get the large infusion of cash it … needs … without undermining any of the principles for which it is fighting.”