The European Union is looking for new sources to finance its military aid to Ukraine. According to a summit draft, Russian interest profits should be skimmed off. But do the member states also agree?
The 27 EU states want to put the financing of military aid for Ukraine on a more secure footing. To do this, they also want to use interest profits from frozen Russian assets. This emerged from the draft declaration for the summit in Brussels.
As previously announced by EU foreign policy chief Josep Borrell, most of the interest income from frozen funds will be used for this purpose. Ursula von der Leyen’s EU Commission presented a corresponding proposal on Wednesday.
According to the Commission, around 210 billion euros from the Russian central bank have been frozen in the EU. The Brussels-based financial institution Euroclear recently announced that it had earned around 4.4 billion euros in interest income in 2023.
Scholz expects great agreement
However, it is still unclear whether all member states support the initiative. There are concerns about possible lawsuits from Russia and loss of investor confidence. Chancellor Olaf Scholz had already announced that he supported the proposal.
He described the use of profits from frozen Russian assets for Ukrainian arms purchases as a clear signal to Russian President Vladimir Putin. “He has miscalculated if he believes that we are not in a position to support Ukraine for as long as necessary. And the use of windfall profits is a small but important component,” he said Start of the two-day consultations in Brussels.
“I think there will be a lot of agreement here,” he added, referring to the expected discussion with Hungary, for example. “What is important to me is that we now give this use a clear direction,” said Scholz, mentioning the purchase of ammunition.
More bilateral military aid?
At the same time, the Chancellor warned that other EU states should increase their bilateral military aid to Ukraine. “All European countries have to make a good contribution. I see noticeable progress there.” In the run-up to the meeting, it had already become known from German government circles that Scholz would use the summit to encourage an increase in aid for Ukraine bilaterally.
Estonian Prime Minister Kaja Kallas had proposed that each country make 0.25 percent of its economic output available for military aid to Ukraine. However, most of the 27 EU states are far away from this. Many EU countries are struggling with budget problems. That is why the use of several billion euros annually from the interest income from frozen Russian assets is seen as a way to better secure aid for Ukraine.
Demanded more money for the defense sector
The EU summit will also discuss how more money can be pumped into the European defense industry in order to quickly increase the production of weapons and ammunition in view of Russia’s military buildup. The draft summit declaration states that the European defense industry’s access to public and private financing should be improved. The EU Commission and the relevant ministers should examine all options for mobilizing financial resources and report on them by June.
The European Investment Bank (EIB) is asked to adapt its policy on lending to the defense industry and its current definition of dual-use items for civil and military use. But she should also make sure that she maintains her credit rating. The background to this is, among other things, that investments in the defense sector are not classified as “sustainable”.