EU Council Greenlights Use of Net Windfall Profits to Support Ukraine's Self-Defense and Reconstruction

 

In response to Russia's ongoing aggression against Ukraine, the EU Council has adopted a significant measure to support Ukraine's defense and reconstruction efforts.

The new legal acts mandate that net profits arising from extraordinary revenues of central securities depositories (CSDs) in the EU, particularly those holding Russian sovereign assets and reserves exceeding €1 million, will be redirected to aid Ukraine.

Since February 15, 2024, these CSDs have been accumulating net profits, which will now contribute to Ukraine's military support and defense industry through the European Peace Facility, as well as to reconstruction efforts via EU programs. The funds will be allocated as follows:

90% to the European Peace Facility: This will bolster military support for Ukraine, enhancing its defense capabilities.

10% to EU programs financed from the EU budget: These funds will aid in the reconstruction of Ukraine’s infrastructure and support its defense industry capacities.

The financial contributions from CSDs will be remitted to the EU on a bi-annual basis. To ensure compliance with statutory capital and risk management requirements, CSDs are allowed to retain around 10% of their financial contribution temporarily.

This allocation strategy will undergo an annual review, with the first evaluation scheduled before January 1, 2025, to ensure that the funds are being used effectively and in line with the evolving needs of Ukraine.

This decisive action by the EU underscores its commitment to supporting Ukraine in the face of ongoing aggression, ensuring both immediate military support and long-term reconstruction and defense capacity building.