The EU plans to invest €200 billion from Russian assets to maintain aid to Ukraine

The European Union is seeking to obtain new funds from frozen Russian assets by transferring $200 billion to a new, riskier investment fund that will pay higher interest rates.

It is noted that the purpose of this decision is to generate more profit, but it does not provide for the complete confiscation of Russian assets. Some EU countries, such as Germany and Italy, oppose this due to financial and legal difficulties.

The EU hopes that using only the interest (rather than the assets themselves) will help avoid accusations of violating international law.

As one option, officials are considering transferring the assets from the Belgian institution Euroclear to a special fund to be created by the EU itself.

According to Politico, the advantage of such a fund is the ability to invest in riskier projects that could generate significantly higher returns for Ukraine. However, it is not yet known what investments are being considered.

Under current rules, Euroclear must invest assets, many of which have already been converted into cash, in the Belgian central bank. The return there is minimal because it is a risk-free investment.

Another possible advantage is that the new fund could protect the assets from the risk that Hungary will veto the extension of sanctions and effectively return the funds to Russia.

According to two sources, the European Commission has been holding informal talks with countries such as France, Germany, Italy, and Estonia in recent weeks to find a legal way to keep the frozen assets if Hungary blocks the sanctions. But no solution has been found yet.

Critics warn that if the investments fail, taxpayers will have to cover the losses. The EU is looking for unconventional options because its €1.2 trillion budget is already overburdened, and a new financial plan will not take effect until 2028.

“It will be very difficult to find the money within the current budget,” said one diplomat.

In addition, due to economic constraints and the need for a unanimous decision, officials doubt that the budget can be replenished, especially since Hungary is likely to oppose it.

Source: New Voice, Politico