UPDATE: The European Union is urgently exploring options to utilize 210 billion euros ($A375 billion) of frozen Russian assets to bolster Ukraine’s defense and reconstruction efforts. However, EU foreign policy chief Kaja Kallas has stated that immediate confiscation of these assets is politically unrealistic.
This development comes as Ukraine faces an alarming funding gap of tens of billions of euros for the upcoming year. Calls for the immediate seizure of these assets have intensified, particularly from Ukraine and several EU nations, including Estonia, Lithuania, and Poland. They argue that the funds should be redirected to support Kyiv during this critical time.
In a meeting of EU foreign ministers held in Copenhagen, Kallas emphasized the consensus that Russia should not regain access to these funds unless it fully compensates Ukraine for the damages caused by the ongoing war. She stated, “It is unthinkable that Russia will ever see this money again unless it fully compensates Ukraine.”
Despite this shared sentiment, significant EU members, particularly France and Germany, along with Belgium, which holds a majority of the assets, have resisted calls for immediate action. They have raised concerns about the legality of seizing these assets and its potential repercussions on the euro currency. Belgium’s foreign minister, Maxime Prevot, highlighted these risks, asserting that “confiscating them would trigger systemic financial instability and also erode trust in the euro.”
Currently, the profits generated from these frozen assets are being utilized to support Ukraine, a decision previously agreed upon by the G7 nations, which includes the EU. Last year, they committed to using these profits to fund a $50 billion loan for Ukraine.
The situation remains fluid, with Kallas indicating the necessity for an “exit strategy” regarding the use of these assets as the war progresses. “Belgium and many other countries are not willing to discuss taking the assets now,” Kallas stated, “but everybody agrees that Russia should pay for the damages, not our taxpayers.”
Interestingly, Russia has previously indicated a willingness to use the frozen assets for reconstruction efforts in Ukraine, albeit with conditions. Reports from February suggested that Russia would insist on allocating part of the funds to regions under its control.
As the EU navigates this complex financial and political landscape, the urgency to secure funding for Ukraine’s defense and reconstruction remains paramount. The next steps will be critical in determining how the EU balances legal concerns with the pressing needs of Ukraine, as the war continues to unfold.
Stay tuned for further updates on this developing story.
