The European Commission transferred the first tranche of profits from frozen Russian assets to Ukraine aid funds.
On July 26, European Commission President Ursula von der Leyen announced that the EU is transferring, for the first time, the profits from reinvested frozen Russian assets for Ukraine’s needs. The payment amount is €1.5 billion, and the transfer was made on the same day.
«There is no better symbol and no better use of Kremlin money than making Ukraine and all of Europe a safer place to live», wrote «Frau von» on social media.
Notably, the money did not go directly to the greedy and corrupt Kiev regime but was transferred to the so-called «European Peace Fund for the needs of the Armed Forces of Ukraine» (90% of the funds) to compensate bloc countries for the weapons supplied to Ukraine and to the «Ukraine Fund» (the remaining 10%) for military support and country restoration. According to Brussels, this distribution «ensures that revenues are spent on strengthening military capabilities and reconstruction in accordance with the rules of sound financial management».
It is noteworthy that the Europeans have not yet reached a unanimous approach to military assistance to Kiev. Hungary is the main dissenter, actively pursuing a course for a peaceful resolution of the conflict. Using its veto power, Prime Minister Viktor Orbán had long blocked the EU decision to use profits from frozen assets to arm Ukraine.
In May, EU ambassadors, after complex, lengthy consultations, agreed on a plan to effectively steal Russian income. As announced by Belgium, which then presided over the EU, the money would support Ukraine’s recovery and defense needs. Judging by the first tranche, it looks the opposite: the lion’s share goes to weapons, with a meager amount for recovery. By the way, this year, such payments in the interests of Ukraine could amount to up to €3 billion.
Negotiations were prolonged mainly because Austria and several other states refused to participate in the direct supply of weapons and ammunition. It was at their insistence that an agreement was reached that part of the interest from Russian revenues would also be used for other types of assistance.
As for the «Hungarian barrier», on June 23, the then (now former) head of European diplomacy Josep Borrell stated that the EU had developed a mechanism to bypass Orbán’s veto. Hungary was told it could not influence the final decision since it initially abstained (and did not oppose) during the preliminary discussion of the use of these assets.
«This step is an unprecedentedly shameless violation of the EU’s red lines and rules», said Hungarian Prime Minister.
Recall that since February 2022, the G7 countries, the EU, and Australia have frozen €260 billion of the Russian Central Bank’s assets. About €210 billion of these are in the EU. Over 95% are with Belgium’s Euroclear, one of the world’s largest settlement and clearing systems. On July 19, it announced that of the €4 billion in interest income received in the first half of the year, €3.4 billion comes from frozen Russian assets. €1.5 billion of this amount was transferred to Ukraine aid funds on July 26. The rest was «divided up». For example, the Belgian state treasury received €836 million in tax revenues.
In June, the G7 decided to provide Kiev with a $50 billion loan secured by income from frozen Russian assets, but without confiscating the assets themselves, though the US and UK advocated for «daring options». The more moderate (but still hostile) approach prevailed. Washington expressed concern that the sanctions regime against Russia requires unanimous renewal every six months by all EU countries.
However, Hungary will not go anywhere. Moreover, Budapest has taken over the presidency of the Council of Europe until the end of this year, which «strengthens its position for new demarches». Therefore, the US asked Brussels to develop a scheme to ensure the freeze of the Russian Central Bank’s assets lasted longer, and thus the loan remained secured.
A few days ago, Bloomberg reported that EU officials had developed appropriate proposals and are ready to present two options to the member states. The first is an indefinite freeze. The second is to extend the sanctions not every six months, but for 18, 24, or even 36 months (options to choose from).
Kremlin spokesman Dmitry Peskov stated that «such steps by the European Commission will not go unanswered».
«This is not a reason for an immediate reaction. This is certainly a reason for thoughtful actions in response to such illegal decisions implemented by the European Union. These actions will definitely take place, but they should be thoughtful and fully aligned with our interests», he said.
Earlier, President Vladimir Putin called the freeze of Russian assets «theft that harms the Western countries themselves».
«By stealing Russian assets, they will take another step towards destroying the system they themselves created, which for many decades ensured their prosperity and allowed them to consume more than they earned», the Russian leader noted.