In a recent development, the European Commission has modified its plan to utilize frozen Russian assets for Ukraine, suggesting that a portion of the derived proceeds this year be allocated towards non-military aid as well. According to a document seen by POLITICO, the EU executive will propose that approximately 10 percent of the estimated €3 billion from immobilized assets be assigned for non-military assistance to the war-torn country. The remaining 90 percent would be used for the purchase of weapons.

The Commission's proposal will be deliberated by EU leaders at a summit in Brussels on Thursday, with the aim of disbursing the funds to Ukraine by July. As Russia's invasion continues into its third year, European capitals are exploring ways to replenish Ukraine's depleted arsenal. However, this debate stands separate from the ongoing U.S. endeavor to convince the EU to utilize the funds from a wholesale confiscation of over €250 billion worth of Russia's frozen assets, rather than solely relying on profit from investments. European capitals have reservations about this suggestion due to legal and financial risks.

In a departure from Commission President Ursula von der Leyen's initial standpoint, the proposal suggests that the funds will not be exclusively designated for weapons purchases through the European Peace Facility. Von der Leyen had previously supported this option earlier this year. Instead, the cash will also provide budget support to Kyiv and be directed towards various Union programs financed from the Union budget, such as the Ukraine facility. The document also mentions the possibility of leveraging the funds to modernize Ukraine's defense industry.

This diluted plan is a concession to several countries that have expressed opposition to using all of the proceeds for buying weaponry for Ukraine. Some countries, including Hungary and Slovakia, fear that such purchases may contribute to military escalation in the region. Additionally, nations like Malta and Ireland, adhering to long-standing neutrality policies, are prohibited from acquiring lethal weapons for foreign countries.

While EU officials anticipate that leaders will provide guidance on how to allocate the funds, a comprehensive agreement is unlikely this week due to ongoing legal assessments. Euroclear, the Belgian-based security depository holding the majority of the frozen assets, will retain the profits from 2022 and 2023 as a precautionary measure against potential legal risks.