European Union leaders are contemplating utilizing approximately $3 billion annually from frozen Russian financial assets’ windfall profits to aid Ukraine’s war effort.
The proposal is set for discussion at an EU summit on Thursday, though achieving the necessary unanimity is anticipated to be challenging.
This plan represents a more extensive approach than a prior EU initiative, established in late 2023 and provisionally agreed upon last month, which aimed to utilize interest payments and other accrued profits in Brussels-held accounts to assist Ukraine’s reconstruction.
German Chancellor Olaf Scholz expressed confidence in fellow leaders’ agreement on this new initiative, emphasizing its primary focus on acquiring weapons and ammunition crucial for Ukraine’s defense.
A “growing majority” of EU nations advocate directing these profits toward the European Peace Facility, launched in 2021 to finance the EU’s global defense and military measures, unlike the general EU budget, which cannot be used for arms purchases.
Pressure to enhance military support for Ukraine has intensified as US aid delivery slowed, and Russia made battlefield gains.
Following Russia’s invasion of Ukraine in 2022, Western countries froze nearly half of Moscow’s foreign reserves, approximately €300 billion ($327 billion), with around €200 billion ($218 billion) in EU accounts, mainly at Euroclear.
Euroclear’s accumulation of significant cash from payments related to frozen Russian assets, such as interest on bonds and reinvested securities proceeds, is a key aspect of this proposal.
The European Commission’s plan involves a special levy to collect windfall interest income on these frozen assets, estimated to yield about €3 billion ($3.3 billion) annually, according to EU foreign policy chief Josep Borrell.
The aim is to transform banknotes into weapons, emphasizing the need for physical arms for defense.
The EU and its allies are resolute in making Russia contribute to Ukraine’s reconstruction expenses, estimated at $486 billion over the next decade, with immediate needs totaling around $15 billion this year alone for energy, transport infrastructure, housing, and other priorities.
Additionally, a €5 billion ($5.5 billion) top-up for the European Peace Facility, earmarked in a dedicated Ukraine Assistance Fund, will further support the country’s military requirements.
Source-CNN
