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

European Union (EU) member states reached an agreement “in principle” on a plan to use Russian assets frozen in the EU to finance military aid for Ukraine, the Belgian government said Wednesday.

EU Commission President Ursula von der Leyen said that “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.”

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

🇺🇦 EU ambassadors agreed in principle on measures concerning extraordinary revenues stemming from Russia’s immobilised assets.

👉 The money will serve to support #Ukraine's recovery and military defence in the context of the Russian aggression.

— Belgium in the EU (@BelgiuminEU) May 8, 2024

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Leaders of the 27-nation EU agreed in March to move ahead with the proposal expected to unlock some three billion euros ($3.3 billion) a year for Kyiv – but diplomats had yet to hammer out details of the plan.

The EU is holding around 210 billion euros ($225 billion) in Russian central bank assets, most of it frozen in Belgium, in retaliation for Moscow’s war against Ukraine. Kyiv has long been urging that those funds be used to get vital military supplies as it struggles to stave off renewed Russian attacks.

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A small group of member states, especially Hungary, refuse to supply weapons to Ukraine so special safeguards had to be included in the deal to allow for some 10% of the funds to be considered general aid. EU member states still need to officially endorse the ambassadors’ agreement.

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

About 90 percent of the funds frozen in the EU are held by the international deposit organisation Euroclear, based in Belgium.

As part of the agreement, diplomats said Belgium agreed to send Ukraine the totality of the tax revenues generated by the profits – which had been a sticking point in negotiations.
That is expected to free up an additional 1.7 billion euros in tax revenues for Ukraine in 2024.

Euroclear’s fee for handling the assets was also slashed tenfold, to 0.3 percent of profits, as part of the deal, diplomats said.

With inputs from agencies.