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Russia vows retaliation if EU arms Ukraine with its frozen asset profits

Pilots carry a drone on a training ground in Ukraine's capital Kiev on February 23, 2024. (Photo by AFP)

Russia says it will take retaliatory measures in accordance with its own interests if the European Union decides to take revenues from the Kremlin’s frozen assets and use them to buy weapons for Ukraine.

Brussels is pressing ahead with a plan to use the profits generated from billions of euros of Russian assets frozen in Europe to arm Ukraine, a senior official said Tuesday.

EU foreign policy chief Josep Borrell hopes that EU leaders will endorse the plan at a summit in Brussels starting on Thursday.

But ahead of the meeting, Kremlin spokesperson Dmitry Peskov said Moscow will use every legal mechanism at its disposal if Brussels goes ahead with the plan Moscow described as “banditry and theft.”

“Naturally, we will use all possible judicial mechanisms, those that are available now, and all those that become available in the future,” he said. 

“And on the basis of reciprocity we will not retaliate in kind, but choose different methods in a way that corresponds to our own interests,” he added.

The EU is holding around $217 billion in Russian central bank assets as part of sanctions imposed on Moscow over its “special military operation” in Ukraine. Most of the funds are held in Belgium.

The 27-nation bloc estimates that the interest on that money could provide around $3.3 billion each year.

Under the plan, around 90% of the money would be put into a special fund that many EU countries already use to get reimbursed for arms and ammunition they send to Ukraine.

“The Russians will not be very happy. The amount of money, 3 billion per year, is not extraordinary, but it is not negligible,” Borrell told reporters.

On Tuesday, European Council President Charles Michel called on the EU to shift to a “war economy” mode and “give Ukraine enough support to stop Russia.”

The EU has provided Ukraine with over $30 billion in military assistance, ranging from ammunition to air-defense systems, Leopard tanks, and fighter jets — in addition to supplies provided directly on a bilateral basis by the bloc’s member states.

Chinese banks under pressure by EU, US

In separate remarks, the Kremlin spokesperson slammed the West for putting “unprecedented pressure” on Chinese banks accepting payments from Russia.

“The unprecedented US and EU pressure on China continues... this creates certain problems,” Peskov said.

Russian media reported earlier on Thursday that some Chinese lenders had stopped accepting payments in Chinese yuan from Russian companies.

Officials in Washington and Brussels are targeting companies and banks in third countries they say are helping Russia avoid Western sanctions by trading and executing payments.

Since the start of the war in Ukraine in February 2022, China has become Russia’s most important economic ally. Trade between the two world powers has reached more than $240 billion, according to official data from Beijing.

The figure is a record for both Beijing and Moscow.

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