On Wednesday, the European Union proposed transferring to Ukraine profits of $2.7-3.3 billion per year generated by Russian central bank assets frozen in Europe after Moscow invaded Ukraine in 2022.
Around 90% of the funds will be used to purchase weapons for Ukraine through the European Peace Facility fund. The rest will go toward recovery and reconstruction.
EU to Give $3 Billion of Profits to Ukraine
The annual amount that Kyiv will have access to will be determined by global interest rates because the earnings are the returns on approximately $200 billion in assets held by the Russian central bank in the 27-member EU in various currencies.
Ukraine will additionally be compensated for the annual 25% profit tax levied by the Belgian government. This is anticipated to come to $1.8 billion in 2024, of which $1.6 billion will be paid for this year.
This year, the frozen Russian assets in the EU will provide between $4.3 and $4.9 billion to Ukraine's overall budget.
The profits are set aside twice yearly for Ukraine after the EU government approves the Commission's proposal, with the first tranche already allocated in July.
Furthermore, EU central securities depositories hold Russian assets, mainly Belgium's Euroclear, which will set aside 3% of the income for operating costs and temporarily hold 10% of the proceeds as insurance against potential legal action from Russia.
The Commission stated that the amount temporarily maintained can be increased if necessary. All the money will be given to Ukraine after the war unless Moscow needs it to pay for legal claims.
According to European Commission Executive Vice President Valdis Dombrovskis, Russia is being held responsible for the massive damage it has inflicted.
He said that their proposal would redirect substantial windfall revenues from frozen Russian state assets to benefit Ukraine and its people, up to $3 billion annually.
Dombrovskis added that the G7 countries, Japan, the United States, Canada, and Britain, had coordinated with the EU's move.
Hungary Opposes Funds Transfer to Ukraine
EU leaders will not be able to agree on the decision to confiscate funds from frozen Russian assets for Ukraine at the EU summit due to Hungary's refusal to use these funds to buy weapons for the Ukrainian military.
A senior European diplomat, speaking on anonymity, stressed that most EU members agree that the money taken should be used to equip the Ukrainian armed forces with weapons and ammunition.
The source noted that Ukraine currently needs more money for weapons rather than reconstruction and said that they are striving to do everything to prevent further destruction in Ukraine.
Furthermore, a DW interlocutor explained that Hungary opposes this, saying that this money should go to anything but weapons for Ukrainians.
