European Union leaders will meet on Thursday to discuss strategies aimed at significantly enhancing military and financial assistance to Ukraine. One proposal involves utilising billions of euros from frozen Russian assets to purchase arms for Ukraine, thereby strengthening Kyiv’s defense against Moscow’s attack.
The summit of the bloc’s 27 national leaders will also address concerns about Europe’s own defense capabilities and the need to bolster its arms industry amid apprehensions that Russia’s aggression may extend beyond Ukraine and uncertainty regarding the future reliability of U.S. support for Europe.
The urgency surrounding the conflict in Ukraine has led to a notable shift in rhetoric against Moscow in recent days. Additionally, leaders are expected to explore controversial plans to confiscate interest profits from frozen Russian assets, with the majority of the funds intended for Ukraine. Charles Michel, the President of the European Council, emphasized the necessity of taking decisive actions to prepare for defense and elevate the EU’s economy to a war-ready status in the face of the most significant security threat since World War II.
According to estimates by the European Commission, the profits generated from the frozen assets, including various Russian central bank securities and cash, could range between 2.5 billion euros ($2.73 billion) and 3 billion euros ($3.3 billion) annually. The EU currently holds approximately 210 billion euros ($228 billion) in Russian central bank assets, predominantly frozen in Belgium as a response to Moscow’s aggression against Ukraine. These assets are projected to yield profits of up to 3 billion euros ($3.3 billion) per year.
A handful of member countries, including Hungary, have been reluctant to supply weapons to Ukraine. Consequently, the surplus profits from frozen Russian assets would be allocated accordingly.
Approximately 90% of these funds would be channeled into a special fund already utilized by many EU nations to cover expenses related to arms and ammunition provisions. The remaining 10% would be allocated to the EU budget to support the enhancement of Ukraine’s defense industry. This division would allow countries opposed to supplying weapons to argue that they are not directly contributing to the arming of Ukraine.
The frozen assets are held by EU central securities depositories, primarily Belgium’s Euroclear. Ukraine would also receive the 25% tax imposed by the Belgian government on the profits generated from these assets.
The European Commission, the EU’s executive body, recently proposed redirecting profits from Russian assets frozen in Europe following Moscow’s attack, with around 90% of the funds earmarked for an EU-administered fund dedicated to financing arms for Ukraine.
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