The EU hopes to advance talks on the use of Russian resources for Ukraine

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By Gabriela Baczynska and Julia Payne

BRUSSELS (Reuters) – European Union leaders meeting later in October will demand “decisive progress” on using Russian assets frozen by sanctions to help Ukraine, according to their draft statement, addressing an issue already stuck for months.

The United States and Britain last month expressed support for an EU plan to tax windfall profits generated by frozen Russian government bonds to finance Ukraine as Kiev battles a full-scale Russian invasion that began in February 2022.

Finance ministers from the Group of Seven (G7) industrialized countries meeting in Morocco on Thursday estimated that $280 billion (266 billion euros) of such assets had been frozen, and expected more work to be done in coming months to find legally sound ways to use them to help Ukraine.

EU members Germany and France are part of the G7 club, where the EU administration of the European Commission is also represented.

The EU’s own work among its 27 member states on tapping frozen Russian state assets for Ukraine has been repeatedly delayed over legal challenges, including after the bloc’s sanctions on private Russian wealth were challenged in court.

The bloc’s national leaders meeting in Brussels on October 26 and 27 will call for “decisive progress… on the use of revenues from Russia’s immobilized assets,” according to their draft joint statement seen by Reuters on Friday .

Diplomats from EU countries will hold technical discussions on the issue on October 17. There was no immediate comment from the European Commission on when the Brussels-based executive branch would submit a related legal proposal.

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Belgium, an EU country but not a member of the G7, said earlier this week it would spend 2.3 billion euros to support Ukraine, expected to collect taxes on the Russian power plant’s assets in 2023-2024 bank immobilized on its territory.

The Belgian clearing house Euroclear manages approximately 125 billion euros in frozen assets of the Russian central bank. The company had no comment Friday.

An EU official said this week that EU talks on the windfall tax had not made progress for months, partly because of objections from Belgium, which currently has the sole power to decide what to do with tax revenues amid Euroclear’s rising profits.

An official from Belgium said the country is pushing for a G7 solution and explained that an EU-only ban would be ineffective because without such requirements, companies would be diverted from Euroclear to other international clearing houses.

Other clearing houses in Europe include Deutsche Boerse’s Eurex (ETR:) in Frankfurt and London-based LCH, which handles the bulk of euro-denominated interest rate swaps even after Brexit.

©Reuters.  FILE PHOTO: Word

LCH is a unit of the London Stock Exchange Group (LON:). Thomson Reuters (NYSE:), the parent company of Reuters news agency, has a minority stake in LSEG.

(1 euro = $1.0544) ($1 = 0.9486 euros)

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