Because of the war of aggression against Ukraine, more than 200 billion euros of the Russian central bank’s funds were frozen in the EU. Now, for the first time, Ukraine is benefiting from this.
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 making 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 in the spring to use these for Ukraine. The money is now flowing to countries such as Germany and 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 of the Russian central bank are 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 to the governments of the EU states by Commission President von der Leyen and EU foreign policy chief Josep Borrell in March. It provides that 90 percent of the usable interest income from the safekeeping of Russian central bank funds should be channeled into the EU fund for financing military equipment and training. The remaining ten percent should be used for direct financial aid for Ukraine.
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 retaliatory measures. Moscow 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, direct use of Russian assets could also lead to other states and investors losing confidence in the European financial center and withdrawing assets from the EU.
The Kremlin had already criticized EU plans to use interest income from frozen Russian assets to benefit Ukraine in May as “expropriation.” Brussels had opted for a “reduced variant” in its approach against Russia by only considering the interest, Kremlin spokesman Dmitry Peskov said at the time. “But even this reduced variant is nothing other than expropriation,” he added.
