The European Commission has proposed transferring to Ukraine profits of €2.5-3bn a year generated by Russian central bank assets frozen in Europe.
Ninety percent will be channelled through the European Peace Facility fund to buy weapons for Ukraine. The rest will be used for recovery and reconstruction.
The exact amount available for Kyiv each year will depend on global interest rates as the profits are the returns on €210bn of Russian central bank assets held in various currencies in the 27-nation EU.
On top of these profits, Ukraine will also receive every year the 25% tax that the Belgian government puts on the profits. For 2024, this is expected to amount to €1.7bn, of which €1.5bn will be paid this year.
The total financial contribution for Ukraine from frozen Russian assets in the EU will therefore total €4-4.5bn this year.
Once the commission proposal is approved by EU governments the profits are set aside for Ukraine twice a year, with a first tranche already in July.
The Russian assets are held by EU central securities depositories, mainly Belgium’s Euroclear, which will keep 3% for operational expenses and temporarily retain 10% of the profits as a safeguard against legal action by Russia.
The amount temporarily retained might be raised if needed, the commission said. After the war, all the money, unless used to cover legal claims by Moscow, will be passed to Ukraine.
For now, the EU proposal does not envisage the confiscation of the capital of the Russian assets, only the use of the profits they generate.
European Commission Executive Vice President, Valdis Dombrovskis asserted that Russia was being held to account for the massive damage it had caused.
He said, “Our proposal will redirect substantial windfall revenues from frozen Russian state assets for the benefit of Ukraine and its people, to the tune of up to 3 billion euros a year.”
Dombrovskis said the EU had coordinated its move with the G7 countries – the US, Canada, Britain and Japan.
However, the Kremlin warned that the EU would be committing an “unprecedented violation” of international law if it used frozen Russian assets to arm Ukraine.
Kremlin spokesperson Dmitry Peskov stated, “The Europeans are well aware of the damage such decisions could do to their economy, their image, their reputations as reliable guarantors.”
“They will become the target of prosecution for many decades,” he added.
Russian foreign ministry spokesperson, Maria Zakharova also warned that Moscow would inevitably respond to what she called “direct banditry and theft.”
Ukraine Receives First €4.5bn Of Support Under The EU’s New Ukraine Facility
The European Commission disbursed the first €4.5bn of support under the EU’s new Ukraine Facility.
In a statement published by the commission, its President, Ursula von der Leyen said, “Today is a good day for Ukraine, as more EU funds are flowing to meet urgent needs.
“This payment, in the form of bridge financing, is crucial to help Ukraine maintain the functioning of the State in this difficult moment.
“Ukraine has also delivered the Ukraine plan. This success is all the more impressive, since it is only 19 days ago that the Ukraine Facility entered into force. The plan maps out how Ukraine can get back to rapid growth and start to recover the losses that the war has caused. With it, Ukraine has laid a solid foundation for the EU’s support, right up until the end of 2027.”
Ursula von der Leyen
Ukrainian Prime Minister, Denys Shmyhal noted in a post on X that after “fruitful discussions in Brussels,” he was “pleased to share good news.”
“Today we received a first tranche in amount of €4.5bn through the Ukraine Facility Exceptional Bridge Financing,” he wrote.
Shmyhal also said that he was “grateful” to von der Leyen for “her invaluable support.”
“This strengthens our economic and financial stability,” he added.
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