EU suggests using frozen Russian assets’ profits to arm Ukraine

Brussels – About three billion a year, starting in 2024: That’s how much the profits generated by Russian assets frozen in the EU amount to. Today, the EU High Representative for Foreign Affairs, Josep Borrell, put a proposal on the table of the EU Council to use them to finance Ukraine. No longer its reconstruction, as had been speculated in Brussels for months: 90 per cent of these resources will go to military support for Kyiv’s resistance.

“There is no better symbol or use for that money than to make Ukraine and all of Europe a safer place to live. I am proud to present this proposal today,” European Commission President Ursula von der Leyen wrote in a post on X. A proposal that, if adopted quickly by the council, could guarantee additional resources to Ukraine already “before the summer,” a senior EU official predicts.

As of February 2022, Russian Central Bank assets and reserves worth about 210 billion euros are tied up in EU countries. Depending on interest rates, it will yield approximately 3 billion in profits per year that the EU has identified to invigorate military support for Kyiv, which struggles to meet battlefield needs. In essence, Borrell’s proposal calls for allocating 90 per cent of these revenues to the provision of military equipment through the European Peace Fund—in addition to the 5 billion for 2024 alone agreed on March 14—while the remaining 10 per cent will go to replenish the part of the EU budget dedicated to the reconstruction of Ukraine and to support and increase the capabilities of Kyiv’s defence industry.

This allocation would apply for 2024, while in subsequent years, as priorities change, the regulation will provide some flexibility and can be “reviewed and amended by the EU Council,” EU sources clarify. The first review would already be scheduled for January 1, 2025. The same sources admit that “there is no firm timeline” for adopting the proposal because the ball is now in the member states’ court. However, there is optimism that the project will progress rapidly. “I hope for a quick adoption by the council,” Borrell said in the morning during the ongoing EU-Ukraine Association Council in the European capital.

Moscow’s response came immediately, with Kremlin spokesman Dmitry Peskov calling Brussels’ move “another statement in line with the movement toward destroying the legal foundations of European and international law.” The EU, which has been reasoning about the legal feasibility of the proposal for some time, clarified that the profits in question are not at Russia’s disposal but of the clearing companies (the central securities depositories) that hold reserves and assets of the Russian Central Bank.

The file will end up in the hands of the heads of state and government of the 27 as early as tomorrow, March 20, at the European Council. The leaders will try to reach an initial political understanding of Borrell’s proposal. A “difficult discussion,” a senior EU official has already predicted, “let’s see if we can conclude this.”