The EU is poised to grant Ukraine access to a substantial financial reserve worth £235 billion. This war chest, comprised of frozen Russian sovereign assets, is set to be made available to Ukraine as early as July, pending the enactment of new legislation by the bloc.
The origins of this financial windfall trace back to 2022 when Russian President Vladimir Putin ordered the deployment of troops into Ukrainian territory.
In response, the United States and its allies swiftly imposed sanctions, including the freezing of approximately £235 billion in Russian sovereign assets held in Western financial institutions.
According to reports from the Financial Times, the United States has proposed the formation of working groups within the Group of Seven (G7) major industrialised nations to explore avenues for seizing these frozen assets.
These assets, primarily held in liquid forms such as major currencies, gold, and government bonds, represent a significant portion of Russia’s foreign reserves, totalling £481bn at the time of freezing.
Russian Central Bank Governor Elvira Nabiullina faced criticism domestically for what nationalists deemed a failure to safeguard the bank’s reserves adequately.
The central bank confirmed that a substantial portion of its assets had been frozen, with a breakdown revealing holdings in various currencies, including euros, US dollars, British pounds, Japanese yen, Canadian dollars, Australian dollars, Singapore dollars, and Swiss francs.
The assets, predominantly invested in foreign securities, bank deposits, and nostro correspondent accounts, were primarily frozen in depositaries, making identification relatively straightforward. Notably, Russia’s gold reserves remained within its borders, while investments in yuan were held in China.
Despite accusations from President Putin, who labelled the freezing of reserves as theft and denounced it as part of an economic war against Russia, the EU’s decision signals a significant shift in support towards Ukraine.