The European Union is moving forward with a proposal to utilize the profits generated from frozen Russian assets in Europe to provide weapons and financial aid to Ukraine. This decision comes as Ukraine faces a critical shortage of munitions, with efforts to secure new funds for weapons from the U.S. Congress hitting a roadblock.
The EU, comprising 27 member nations, currently holds approximately 200 billion euros ($217 billion) in Russian central bank assets, primarily frozen in Belgium as a response to Moscow's aggression against Ukraine. It is estimated that the interest accrued on these assets could amount to around 3 billion euros ($3.3 billion) annually.
The plan, which received approval from most EU foreign ministers, is expected to be endorsed by EU leaders at an upcoming summit in Brussels. The proposal involves allocating 90% of the windfall profits to a special fund used by many EU countries to reimburse expenses related to arms and ammunition sent to Ukraine.
The remaining 10% of the funds would be directed to the EU budget to support Ukraine's defense industry. This allocation aims to address concerns from certain member states, such as Hungary, that are reluctant to supply weapons to Ukraine.
While the EU budget cannot be used to purchase arms due to existing treaty interpretations, the European Peace Facility, where the funds will be channeled, operates off-budget and is not subject to the same legal constraints or parliamentary approval.
Despite previous warnings from the European Central Bank (ECB) about the potential impact on the euro currency and EU markets, EU foreign policy chief Josep Borrell clarified that only profits, not assets, would be utilized. He also confirmed that the ECB was consulted on the plan.
While some EU leaders have suggested using the windfall profits for Ukraine's reconstruction, Borrell emphasized the importance of preventing further destruction in the country. The proposal aims to provide critical support to Ukraine amid ongoing conflict with Russia.
For more updates on the situation in Ukraine, visit AP's coverage of Russia's war in Ukraine.
