EU reaches deal to use profits from frozen Russian assets to fund Ukraine military aid

Belgium, which holds the majority of the EU’s frozen assets, announced the agreement among the 27 ambassadors. It happened after weeks of difficult negotiations among member states, which were compounded by the strict financial constraints on deploying such monies.

The Belgian government announced Wednesday that European Union (EU) member states had reached a “in principle” agreement on a proposal to utilize Russian assets frozen in the EU to finance military aid to Ukraine.

EU Commission President Ursula von der Leyen stated that “there could be no stronger symbol or greater use for that money than to make Ukraine and all of Europe a safer place to live.”

EU ambassadors agreed:

EU ambassadors agreed in principle on measures concerning extraordinary revenues stemming from Russia’s immobilized assets,” it posted on X, formerly Twitter. “The money will serve to support Ukraine’s recovery and military defence in the context of the Russian aggression.”

Leaders of the EU’s 27 nations decided in March to move forward with the proposal, which is estimated to generate three billion euros ($3.3 billion) each year for Kyiv – but diplomats had yet to finalize the plan.

In punishment for Moscow’s war against Ukraine, the EU has frozen around 210 billion euros ($225 billion) in Russian central bank assets, the majority of which are located in Belgium. Kyiv has long urged that the money be utilized to obtain critical military equipment as it struggles to fend off further Russian attacks.

A small minority of member states, particularly Hungary, refused to give weapons to Ukraine, thus specific safeguards were placed in the agreement to allow for 10% of the cash to be designated general aid. EU member states must still officially approve the ambassadors’ agreement.

Under the agreement, which will be submitted to EU ministers for formal approval, 90 percent of the interest would go to the European Peace Facility, a central fund used to pay for weaponry for Ukraine, while the remaining 10% will go to the EU’s separate Ukraine Facility.

Euroclear, an international deposit organisation established in Belgium, holds approximately 90% of the cash frozen in the EU.

As part of the accord, diplomats said Belgium agreed to transfer Ukraine the entire tax income produced by the profits, which had been a sticking point in negotiations.
This is estimated to free up an additional 1.7 billion euros in tax revenue for Ukraine by 2024.

As part of the agreement, Euroclear’s charge for handling the assets was reduced by tenfold, to 0.3 percent of earnings, according to diplomats.

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