The European Union will use as much as $3.25 billion in profits from Russian sovereign assets — frozen by sanctions due to Russia’s war on Ukraine — to fund Ukraine and its military.
“Russia must pay for its war damages,” Czech Republic Minister of Foreign Affairs Jan Lipavský said as he shared the monetary amount on X.
The European Council approved sending the money to Ukraine on Tuesday, roughly two months after reaching a consensus on using revenue from hundreds of billions of dollars’ worth of assets immobilized after Russia launched a full-scale war on its neighbor in February of 2022.
In response to the action, Kirill Logvinov, who heads Russia’s permanent mission to the EU, alleged that the EU Council had “officially elevated theft to the rank of instruments of its foreign policy.”
The remark came from an interview translated by Tass, the Russian state news agency. As for the potential repercussions of the EU move, Logvinov was quoted stating, “the consequences of the created precedent will definitely be unpredictable, including for the eurozone, the economies of the bloc’s member countries, and the investment climate.”
The war has thrust Ukraine into a high-stakes conflict and an immediate humanitarian crisis; the country also faces a massively expensive long-term rebuilding effort.
The Biden administration has been urging the EU and its 27 member states to use money from the frozen Russian assets to aid Ukraine — including by seizing the funds outright.
But opponents of the push for the EU to redirect Russian assets to Ukraine have questioned the legality of such a move, and they warn of setting precedents that could create complicated ripple effects — and possibly undermine the euro’s international standing. And if the EU appropriated the assets, it would raise the likely possibility that Moscow could retaliate by seizing European holdings in Russia.
By choosing to siphon the profits rather than redistribute Russia’s assets, the EU looks to avoid the thorniest of those questions, while still offering a lifeline to Kyiv.
“Those windfall gains that amount to between 2 and 4 billion euros per year could be used for Ukraine’s reconstruction without interfering with international law,” Sweden’s Anders Ahnlid, who led the EU’s working group on using the frozen assets last year, told NPR in March.
Since the war began, the EU, Group of Seven and other U.S. allies have immobilized some $282 billion in Central Bank of Russia assets, with more than two thirds of the total held in the EU’s jurisdiction, the EU Council said in February.
Faced with “net profits stemming from unexpected and extraordinary revenues” generated by those frozen assets and reserves, the EU says 90% of the money will be used for military support to Ukraine.
A portion of the money is also designated to go toward Ukraine’s defense industry infrastructure and reconstruction efforts. The funds will be collected from the Russian accounts on a twice-yearly basis, the EU said.
President Biden signed into law last month the REPO for Ukrainians Act — a measure allowing the U.S. to transfer Russian sovereign funds to Ukraine to help reconstruction — as part of an expansive security spending bill. A bipartisan group of senators is now urging Biden to use that authority, and to implement the new law before the upcoming G7 meeting in June.
