Europe hands Kyiv major victory over Putin

The European Union on Tuesday approved a plan to hand Ukraine the profits generated by frozen Russian central bank assets.

Czech Foreign Minister Jan Lipavsky said the move will hand Ukraine up to €3 billion (about $3.3 billion) this year.

“We have approved in the EU using revenues from Russia’s central bank’s frozen assets to help Ukraine,” wrote Lipavsky on X, formerly Twitter. “Up to €3B only this year, 90% goes for Ukraine’s military. Russia must pay for its war damages.”

Newsweek reached out to the Russian Foreign Ministry via email for comment.

The Context

European Union member states and other Group of Seven countries (G7) had long debated about how $300 billion in Russian central bank assets stashed in Western nations should be used to help Ukraine fund its war effort against Russia.

The financial assets were frozen shortly after Russia launched a full-scale invasion of Ukraine in February 2022.

What We Know

Reuters reported this month that the EU has estimated that by 2027, windfall profits from Russia’s central bank assets frozen in the world’s largest trading bloc could reach €20 billion (about $21.7 billion). The frozen assets have been gaining a huge amount of interest because they are stuck.

More than two-thirds of Russia’s frozen sovereign assets are stashed in the EU.

The plan approved by the EU will see Ukraine receive net profits generated from February 15 onward, according to Bloomberg. First quarter financial results from the Belgium-based financial services company Euroclear, which is holding the majority of the frozen assets, show that some €557 million (about $605 million) has been generated since that date.

Kyiv will receive funds twice a year under the plan.

Views

Sergei Ryabkov, Russia’s deputy foreign minister in charge of ties with the United States, nonproliferation, and arms control, warned in December that the confiscation of frozen Russian assets could sever diplomatic relations between Moscow and Washington.

Diplomatic relations “are not some kind of totem that needs to be worshipped; it is not a sacred cow that everyone protects,” Ryabkov said in an interview with Russian state-run news agency Interfax.

“But we will not take the initiative to destroy them, to tear them apart. It is not in our rules to act in this manner, including based on our understanding that Russia and the United States have a central role in maintaining international security and strategic stability,” he said.

“As for the trigger for a possible round of confrontation with the potential for a breakdown in relations, the trigger could be confiscation of assets, further escalation of military escalation, and much more. I wouldn’t go into negative forecasts here. I’m just saying all this so that there is a clear understanding—we are ready for any scenarios, and the United States should not have the illusion, if it exists, that Russia, as they say, holds on to diplomatic relations with this state [the U.S.] with both hands,” he added.

What’s Next?

Ukraine is set to receive its first collection of net profits from frozen Russian sovereign assets in July, EU diplomats said, according to Reuters.

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Update 5/21/24, 8:02 a.m. ET: This article was updated with additional information.

Update 5/21/24, 8:25 a.m. ET: This article was updated with additional information.