EU Plans to Use Frozen Russian Assets to Provide Weapons and Funds for Ukraine

BRUSSELS - The European Union (EU) is set to utilize the profits generated from frozen Russian assets in Europe to support Ukraine with weapons and financial aid, a senior EU official announced on Tuesday. After receiving approval from most foreign ministers, EU foreign policy chief Josep Borrell hopes that the plan will be endorsed at the upcoming EU summit in Brussels, starting on Thursday.

The move comes as Ukraine faces a critical shortage of munitions, with efforts by the United States to secure new funds for weapons stalling in Congress. Currently, the EU holds approximately 200 billion euros ($217 billion) in Russian central bank assets, the majority of which are frozen in Belgium as a response to Moscow's conflict with Ukraine. The interest on these funds is estimated to yield around 3 billion euros ($3.3 billion) annually.

Borrell acknowledged that the Russians may not be pleased with the decision, highlighting that while the annual amount is not extraordinary, it is still significant. A small number of member countries, including Hungary, have refused to supply weapons to Ukraine. Consequently, the windfall profits will be divided among the remaining nations. Around 90% of the funds will be allocated to a special EU fund, the European Peace Facility, which countries use to get reimbursed for arms and ammunition provided. The remaining 10% will be directed towards bolstering Ukraine's defense industry through the EU budget. Borrell emphasized that countries objecting to sending weapons could claim they are not directly arming Ukraine.

Under current interpretations of EU treaties, the EU budget cannot be used for purchasing arms. However, the European Peace Facility, which operates off-budget and bypasses certain legal standards and approval by the European Parliament, allows for this allocation. Despite concerns expressed by the European Central Bank in the past about seizing Russian assets potentially undermining confidence in the euro currency and EU markets, Borrell clarified that no assets would be seized, only the generated profits would be utilized. He also revealed that the ECB has been consulted regarding this plan.

While some EU leaders, such as Belgian Prime Minister Alexander De Croo, have expressed a desire to use the windfall profits for Ukraine's reconstruction, Borrell believes that prevention of destruction is the best approach.

The EU's initiative to use frozen Russian assets to provide weapons and funds for Ukraine demonstrates its commitment to supporting the country amid its ongoing conflict. The forthcoming EU summit will shed light on the consensus among member states towards this plan and determine its implementation in the coming years.