The interest generated by Russia’s financial assets frozen in the European Union will soon be used, for the most part, to buy weapons for Ukraine and to help Volodymyr Zelensky’s government defend itself from the war of aggression started by Moscow more than two years ago. years. This was decided today, after months of debates, by the diplomatic representatives of the Twenty-Seven in Brussels, as announced by the Belgian presidency of the Council. The initiative, against which the Kremlin has issued severe warnings because it describes it as confiscation, will allow the release of between 2,500 and 3,000 million euros per year for this purpose. The first item that will be used to purchase weapons indirectly financed with Russian money amounts to around 1 billion euros and could be provided to Ukraine in July, according to the community executive.
“There cannot be a stronger symbol or a better use for that money than to help make Ukraine and all of Europe a safer place to live, the president of the European Commission, Ursula von der Leyen, celebrated on social networks, after It was reached that the Twenty-seven had reached a political agreement on the proposal, which must now be formalized at ministerial level. “Russia will pay directly for its crimes,” added Vice President Valdis Dombrovskis. According to the proposal prepared by the European External Action Service headed by the High Representative, Josep Borrell, 90% of the profits generated will be transferred to the European Mechanism. for Peace to be able to use them to buy weapons and ammunition for the benefit of Kyiv. The remaining 10% will be paid into the fund created by the EU to offer macro-financial aid to Ukraine, as requested by neutral countries.
One of the last obstacles to the agreement has been to set the percentage that is allowed to be retained by Euroclear, the clearing and settlement house based in Belgium, whose balance sheet currently contains some 191 billion euros affected by European sanctions that Russia is incapable of out of the Union (the global figure of frozen Russian financial assets amounts to around $280 billion). In the initial proposal it was raised to 3%, but in the end it will be only 0.3%. The custody of these funds has become an ordeal for the company, which faces not only the threat of cyberattacks but also Russian legal actions. The fees collected will swell an emergency reserve fund that could be used in the event of possible legal reprisals and in whose management the European Central Bank (ECB) may participate.
The decision to use the returns on Russian assets falls far short of what the United States and Ukraine have insistently demanded in recent months, confiscating all the money, a measure for which the Twenty-seven see no legal basis and against which The ECB has insistently warned, which fears for the financial stability of the eurozone. Intermediate options, such as using blocked funds as collateral to issue debt in favor of Ukraine, supported by Washington, are also not favored by European governments.
As the headquarters of Euroclear, Belgium has a central role in this matter and the Government of Alexander De Croo has been forced to publicly agree that the tax revenue it obtains from the frozen Russian assets, to which a 25% withholding tax applies, will be 100% will go to Ukraine. The Belgian executive maintains that this is what he had done since 2022 but, during the last round of negotiations, he has had to publicly assume that he will transfer to Kyiv all the tax revenues obtained in this way. “We hope that others, perhaps less visible than Belgium but who also have Russian assets in their possession, will follow our example,” say Belgian diplomatic sources.
