May 8, 2024 - World

EU diplomats agree to use frozen Russian assets to aid Ukraine

Russian President Vladimir Putin in Moscow on May 7.

Russian President Vladimir Putin in Moscow on May 7. Photo: Sofia Sandurskaya/POOL/AFP via Getty Images

European Union diplomats in Brussels agreed on Wednesday to use frozen Russian state assets to aid Ukraine in its defense against Russia's unprovoked invasion.

Why it matters: Since the start of Russia's invasion in February 2022, the West has frozen around $300 billion worth of sovereign Russian assets, but until recently, it has made little progress in deciding if or how to leverage those assets to aid Ukraine.

  • In its third year on the defense against Russia's manpower and firepower advantages, Ukraine is desperate for additional financial and military assistance, especially after lengthy U.S. aid delays contributed to ammunition shortages.

What they're saying: Belgium, which is currently chairing talks in the European Council, said on social media diplomats agreed "in principal" to mobilize the "extraordinary" revenues generated by Russia's assets for Ukraine's recovery and military defense.

  • "There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live," European Commission President Ursula von der Leyen said.
  • European capitals are expected to approve of the agreement later this month.

Zoom in: The plan involves sending Ukraine between $2.7-3.3 billion (2.5-3 billion euros) each year from interest generated by the frozen assets, according to Reuters.

  • 90% of the funds will go through the European Peace Facility fund to purchase weapons for Ukraine, while the remaining will go toward reconstruction and economic recovery.
  • Neutral countries, like Austria, Ireland, Malta and Cyprus, have been given the option to opt out of buying weapons and can limit their assistance to humanitarian aid, according to Politico.

Yes, but: Ukrainian officials, like Ukrainian Prime Minister Denys Shmyhal, have said the EU and G7 countries should go further, confiscate the assets themselves and use them for Ukraine's defense and recovery.

  • European officials have stopped short of direct confiscation over legal and financial risks, as Moscow could target Western money in Russia or pursue legal challenges in retaliation.

The big picture: While EU officials have been wary, the U.S. has recently taken major steps toward direct seizure.

  • Last month, Congress passed, and President Biden signed, legislation that empowers Biden to seize Russian foreign exchange reserves in the U.S. under provisions of the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act.
  • So far, a task force has identified at least $5 billion in Russian central bank assets in the U.S. banking system.
  • However, the U.S. is unlikely to carry out seizures without other Western nations agreeing to do so too, according to AP.

Go deeper: Ukraine says it foiled Russian plot to assassinate President Zelensky

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