EU, agreement on profits from frozen Russian assets. 90 per cent will go to military assistance for Ukraine

Brussels – The EU has reached an agreement that will allow it to rip some €3 billion a year from the Kremlin and deliver it in the form of military assistance to Ukraine. The ambassadors of the 27 countries gave the green light to the proposal put on the table last March 20 by EU High Representative Josep Borrell to use all of the proceeds from Russian frozen assets to support Kyiv’s resistance, 90 per cent through the provision of military equipment and 10 per cent for the future reconstruction of Ukraine.

As of February 2022, assets and reserves of the Russian Central Bank worth about 210 billion euros are immobilised in EU countries. Depending on interest rates, it will yield approximately 3 billion in profits per year, which the EU has identified as a means of energising its military support for Kyiv. Under the proposal, the proceeds—excluding a 0.3 per cent that will be used to pay for the management of the operation by clearing firms holding frozen Russian assets—would be allocated for about 90 per cent to military assistance to Ukraine through the European Peace Fund, while the remaining 10 per cent would go to replenish the part of the EU budget dedicated to the reconstruction of the country 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. The first revision would already be scheduled for January 1, 2025. “There couldn’t be a stronger symbol and better use for that money than to make Ukraine and all of Europe a safer place to live,” the president of the European Commission, Ursula von der Leyen, rejoiced in a post on X.

To ensure a sound legal basis for the proposal, the EU has repeatedly made it clear that Russia does not own the profits in question but the custodians of the securities, the clearing companies that hold reserves and assets of the Russian Central Bank. Chief among them is the Belgian group Euroclear, which holds about 190 billion of the Russian assets tied up since the beginning of the invasion of Ukraine. The Brussels-based clearing company had initially objected to using the proceeds, but “tax revenues generated in Belgium from these windfall profits will, of course, continue to be allocated 100 per cent to Ukraine.” Diplomatic sources reassure that “there is no reversal.”

The agreement is there now—to guarantee additional resources to Ukraine as early as “before the summer”—all that is missing is the formal approval by the EU Council at one of the upcoming ministerial meetings.