EU wants to collect Russian interest income for arming Ukraine

There have long been plans in the EU to use profits from frozen Russian capital for Ukraine. The member states have now agreed on this. Almost three billion euros per year are to flow into military aid.

Around 210 billion euros in assets of the Russian central bank are currently on ice in the EU. EU Commission President Ursula von der Leyen in particular advocates using interest income to finance military aid for Ukraine. This is exactly what the permanent representatives of the member states have now agreed to after weeks of negotiations in Brussels. This was announced by the Belgian EU Council Presidency.

Up to three billion euros are expected to come together this year. The Brussels-based financial institution Euroclear recently announced that it had collected around 4.4 billion euros in interest in 2023.

Von der Leyen welcomed the agreement: “There is no stronger symbol and no better use for this money than making Ukraine and all of Europe safer,” she wrote on X. The next step is to submit the text of the decision to the EU Council of Ministers. According to diplomats, a unanimous vote is expected there.

Also direct financial aid for Kyiv

Von der Leyen and EU foreign policy chief Josep Borrell submitted the proposal for the indirect use of Russian funds for Ukraine to the governments of the EU states in March. It stipulates that 90 percent of the usable interest income from the custody of Russian central bank funds should be channeled into the EU fund for financing military equipment and training. The remaining 10 percent should be used for direct financial aid for Ukraine.

The negotiations were difficult, among other things, because neutral states like Austria did not want to participate directly in the supply of weapons and ammunition. It has now been agreed that some of the interest income will also be used for other financial aid.

There were also discussions about how much money Euroclear could keep for its expenses. The amount was reduced from 3 percent to 0.3 percent over the course of the negotiations. Euroclear is the main institution in the EU that holds assets of the Russian central bank.

The EU is still refraining from complete expropriation

There are currently no plans to use the Russian central bank funds directly through an expropriation decision. One reason for this is legal concerns and likely retaliation. Moscow had already warned the EU last year not to confiscate the property of the Russian state or Russian citizens.

It would be conceivable, for example, that companies operating in Russia from EU countries would also be forcibly expropriated. In addition, direct use of Russian assets could also lead to other states and investors losing trust in the European financial center and withdrawing assets from the EU.

Zelensky: Stop Russian terror

However, the EU’s plan falls short of the demands of Ukrainian President Volodymyr Zelensky and the USA. It is appropriate to use both the profits and the assets themselves to stop Russian terror, Zelenskyj said in a video address at the EU summit in March. He called on the EU to accept risks.

Russia must be aware of the real costs of war and the need for a just peace. Ukrainian Deputy Prime Minister Olexander Kubrakow recently estimated the war damage caused by Russia at 500 billion euros, citing figures from the World Bank, the European Union and the United Nations.