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EU top diplomat Josep Borrell © Chubotin Kirill/Imago
Europe continues to look for resources for Ukraine in the fight against Russia.
It is an unexpected treasure - Russian money.
Brussels - After Moscow's large-scale invasion, allies have frozen more than $300 billion in assets.
At the same time, they confidently promised to “make Russia pay” for the reconstruction of Ukraine.
Two years later, Europe may have finally found a way to tap into that money – but only a small portion of it.
And these days it's less about reconstruction and more about keeping Kiev fighting in the Ukraine war.
Russian money is intended to indirectly arm Ukraine
European Union leaders discussed a proposal at the EU summit in Brussels to use profits from decommissioned assets to support Kiev.
At a time when U.S. funding has stalled and Ukraine is desperate, the proposal could provide about $3 billion a year over several years, mostly for weapons.
If approved, the plan would certainly help Ukraine, but even its proponents struggled to portray it as a major victory.
EU top diplomat Josep Borrell said $3 billion a year was “not extraordinary” but also “not negligible.”
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The story of the mobilization of these frozen funds to support Ukraine in some ways reflects the mood in Europe, as bold declarations to stop Putin and support Ukraine to victory meet the grim realities of war.
Allies have been unsettled in recent weeks by dire reports from the front and worrying signals from the United States, where funding for Ukraine is blocked and Republican presidential candidate Donald Trump is again railing against NATO.
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EU states agree to do more for Ukraine
As leaders arrived in Brussels on Thursday, there was widespread agreement that the region must do more to prevent Russian President Vladimir Putin from winning, but little confidence that Europe can actually thwart his plans.
“Of course I would like to invest in reconstruction, but it is a bit pointless to invest in reconstruction if we risk losing the country,” ventured Belgian Prime Minister Alexander De Croo.
In 2022, allies decided to seize more than $300 billion in Russian central bank assets held outside the country, including more than $200 billion in the European Union.
From the outset, some member states wanted to use all assets to support Ukraine.
Others were skeptical and questioned the legality and long-term consequences of such an approach.
For example, some officials, diplomats and experts fear that seizing Russian assets could deter sovereign wealth funds, investors or central banks from investing in European assets.
The European Central Bank has warned that asset seizures could undermine the euro.
And there are fears in some quarters that Moscow will retaliate against European business interests in Russia.
Talks about what to do with the assets were slow for months but appeared to gain momentum as U.S. aid to Ukraine stalled.
In the fall, senior U.S. officials stepped up efforts to persuade Western governments to use hundreds of billions of dollars in frozen Russian central bank reserves to support Ukraine.
Last month, Treasury Secretary Janet L. Yellen made a strong case for liquidating and using about $300 billion in frozen assets.
“It is necessary and urgent for our coalition to find a way to unlock the value of these retired assets to support Ukraine's ongoing resistance and long-term recovery,” Yellen said in São Paulo, Brazil, according to the Associated
Press
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“I believe there is a strong international legal, economic and moral argument for moving forward,” she said.
“This would be a critical response to Russia’s unprecedented threat to global stability.”
Ukraine could receive the funds by summer
At the moment, Europe is only interested in siphoning off the profits.
Since much of the assets are held by Euroclear, a Belgium-based financial services company, Belgian authorities have helped ensure that some, but not all, of the profits can be used without touching the assets themselves - at least for now.
The plan would see most of the profits from the frozen assets go to Ukraine, but some would remain as a "buffer" to fund litigation if Russia tries to get the money back, according to Belgian and EU officials.
This year, 90 percent of the money will be used for weapons and 10 percent to support the Ukrainian arms industry.
Ukraine could receive the funds by the summer, officials said.
But since ammunition and weapons are in short supply, it is not clear what exactly Kiev will buy and when.
On Thursday, Estonian Prime Minister Kaja Kallas called the proposal a “first step.”
The State Department spokeswoman described the plan as “outright banditry and theft.”
Maria Zakharova continued: “These actions are a gross and unprecedented violation of fundamental international norms,” she said, according to Russian media.
“We said we would respond to this, and we will.”
About the author
Emily Rauhala
is the Washington Post's Brussels bureau chief, covering the European Union and NATO.
We are currently testing machine translations. This article was automatically translated from English into German.
This article was first published in English on March 21, 2024 at the “Washingtonpost.com” - as part of a cooperation, it is now also available in translation to readers of the IPPEN.MEDIA portals.