EU agrees to use profits from frozen russian assets to buy weapons for Ukraine

EU ambassadors agreed in principle on measures concerning extraordinary revenues stemming from russia’s immobilised assets. The money will serve to support Ukraine's recovery and military defence in the context of the russian aggression.

The bloc’s 27 ambassadors agreed to hand over the income generated by investing russia’s immobilized assets in Belgium - worth between €2.5 billion and €3 billion per year - toward Ukraine’s defense against russia’s aggression.

After weeks of hard-fought negotiations, capitals finally sealed a deal that paves the way for the EU to send the money to Ukraine in July. The agreement only applies to the €192 billion being held by Euroclear, the Brussels-based securities depository.

Ninety percent of the proceeds are earmarked to buy ammunition for the war-torn country, while the remaining funding will finance non-military aid.

The EU’s plan offered neutral countries, such as Austria, Ireland, Malta and Cyprus, the chance to opt-out from buying weapons — a red line for this group of states. They can limit themselves to providing humanitarian aid.

Capitals are now expected to carry out technical checks and formally rubberstamp the agreement next Wednesday.

This initiative is separate from a wider-ranging push by the U.S. to confiscate the assets in their entirety to support Ukraine, a move that is being rejected by the biggest EU governments over fears about legal and financial-volatility repercussions. Discussions on the U.S. plan will come to a head during a meeting of G7 leaders in Italy in June.

During negotiations in Brussels, capitals heaped pressure on Belgium to send tax revenues on the profits of the assets - worth around €1.7 billion in 2024 - directly to Ukraine. Diplomats accused the government in Brussels of an accounting trick, effectively double-counting its contributions to the war-torn country.

In an 11th hour concession that unblocked the deal, Belgium agreed that it will funnel the tax revenue to Ukraine — provided that other EU and G7 countries holding russian assets do the same. Belgium is expected to formalize this position in a written statement, said an EU diplomat. 

In another last-minute concession, Belgium also reduced the fee that Euroclear will charge for handling the frozen assets to 0.3 percent - freeing up extra cash for Ukraine, according to two EU diplomats.

Source: Politico, Belgian Presidency of the EU Council in X