Europe EU releases proceeds from Russia assets to Ukraine

For the first time, the EU is releasing interest income from frozen Russian state assets for the defense and reconstruction of Ukraine. EU Commission President Ursula von der Leyen announced a transfer of 1.5 billion euros.

"There is no better symbol or use for the Kremlin's money than to make Ukraine and all of Europe a safer place to live," she wrote on the social network X.

The money in question now is interest income from frozen assets of the Russian central bank in the EU. The EU had already decided in principle to use this money for Ukraine in the spring. The money will now flow to countries such as Germany or the Czech Republic, which will then use it to provide Ukraine with air defense equipment or artillery shells in a timely manner.

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 collected around 4.4 billion euros in interest in 2023.

The proposal for the indirect use of Russian funds for Ukraine was made by Commission President von der Leyen and EU High Representative for Foreign Affairs Josep Borrell to the governments of the EU member 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 ten percent is to be used for direct financial aid for Ukraine.

Kremlin speaks of "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 the likelihood of retaliatory measures. Moscow had already warned the EU last year against confiscating the property of the Russian state or Russian citizens. It is conceivable, for example, that companies from EU countries operating in Russia could then also be forcibly expropriated. In addition, the direct use of Russian assets could also lead to other countries and investors losing confidence in the European financial center and withdrawing assets from the EU.

The Kremlin already criticized EU plans to use interest income from frozen Russian assets for the benefit of Ukraine in May as "expropriation". At the time, Kremlin spokesman Dmitry Peskov said that Brussels had opted for a "shortened version" of its action against Russia by only considering the interest. "But even this shortened version is nothing more than an expropriation," he added.