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EU agrees to use profits of frozen Russian assets to arm Ukraine

EU Commission chief Ursula von der Leyen

The European Union has agreed to use profits from Russian state assets in order to supply Ukraine with military hardware, as the Kremlin has already warned about a possible global clash if the West continues with its flow of arms into the ex-Soviet republic.

Envoys of the European bloc’s member states agreed in principle to use windfall profits from frozen Russian state assets for arming Ukraine.

Russia’s war with Ukraine, which began in February 2022, prompted EU countries to freeze around €200 billion of Russian central bank assets as part of punishing sanctions by the bloc against Moscow.

EU ambassadors had “agreed in principle on measures concerning extraordinary revenues stemming from Russia's immobilized assets,” said the bloc's Belgian presidency in a post on X.

It claimed that the funds would “serve to support Ukraine's recovery and military defense in the context of the Russian aggression,” with a first tranche expected to be freed up in July.

Meanwhile, EU Commission chief Ursula von der Leyen praised the agreement.

“I welcome today's political agreement on our proposal to use the proceeds from immobilized Russian assets for Ukraine. There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live,” she said on X.

If the move is approved at a gathering of EU finance ministers next Tuesday, the interest - worth up to three billion euros per year - will be used to jointly purchase military hardware for Ukraine.

Citing four unnamed EU diplomats, Reuters said that EU ministers still need to approve the legal text that will see 90 percent of the proceeds go into an EU-run fund for military aid for Ukraine, with the other 10 percent would be purportedly used for reconstruction.

The Kremlin has previously said that seizing the interest arising from frozen Russian assets was a move toward the “destruction of the legal foundations of European law and international law.”

Around 70 percent of Russian assets frozen in Western countries are held in Euroclear, a Belgian-based securities depository, which has the equivalent of approximately $204 billion worth of Russian central bank securities and cash.

Since the onset of the current war, Euroclear has made about €5 billion in net profits from the Russian assets, of which, net profits produced until mid-February this year will stay with the depository and act as a buffer against legal claims.

Back in late April, Moscow threatened the West with a “severe” response and “endless” legal challenges if the assets are touched.

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