Weapons for Ukraine on Putin’s money: How the EU wants to use $3 billion of frozen Russian assets for Kiev

EU leaders are about to approve a plan to use around €3bn of profits from investing frozen Russian assets in the West to buy arms for Ukraine, reports Politico.

In February, British Prime Minister Rishi Sunak suggested that the billions of euros – derived from the interest these Russian assets generate – be used to arm Ukraine.

The 27 member states of the European Union have frozen assets worth 200 billion euros belonging to the Central Bank of Russia, as well as private assets worth 30 billion euros belonging to Russian oligarchs, after the launch of the Russian invasion of Ukraine in February 2022.

According to Politico, the profits from interest on these Russian assets are worth between 2.5 and 3 billion euros per year. In Tuesday’s talks, the Belgian government signaled that, starting in 2025, it would channel revenues into a common EU or G7 fund for Ukraine.

“The Belgian federal government is prepared to consider an arrangement starting in fiscal year 2025 with the EU/G7 to transfer national corporate income tax from frozen Russian sovereign assets,” according to a Belgian government statement cited by Politico.

Belgium has an important role to play in the development of this plan, because most of the Russian assets frozen in the West (about 190 billion euros) are held by the financial services company Euroclear, which is based in Brussels.

The expected EU decision comes after the US and several European countries – led by Germany – pressured the Belgian government to allocate the money to Ukraine. Thus, German Chancellor Olaf Scholz declared on Monday that approximately 90% of the revenues generated by frozen Russian assets should be spent on the purchase of weapons for Ukraine.

Last year, EU leaders concluded that they could not directly confiscate frozen Russian assets, legally, but instead, a solution could be to transfer the profits obtained from the investment of these assets. More precisely, companies that have Russian assets and that generate large profits from the investment of those assets should be obliged to transfer a substantial part of the profits generated to the EU.

Until now, Belgium used interest income and sent the money independently to Ukraine through a national fund. The Belgian government claimed that a large part of the money thus collected – about €1 billion out of €1.7 billion in 2024 – was earmarked for the purchase of arms for Ukraine.

“The chances of finding a consensus … are good,” an EU diplomat was quoted as saying by Politico.

According to Brussels’ plan, only the amounts generated from the assets of the Central Bank of Russia frozen in the EU will be targeted. The Commission estimates that these assets could generate between three and 15 billion euros per year between 2023 and 2027, but officials have warned that the final amount will depend on how interest rates will evolve during this period. But it is necessary for the EU member states to unanimously approve this plan, as well as the next implementation steps, before the money can be sent to Kyiv, reports Agerpres.

Editor: CS | ML

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