EU Plans to Turn Russian Asset Profits into Ukrainian Defense Funds

EU leaders are thinking about a bold plan to use about $3 billion every year from the extra money made from Russian assets that have been frozen.

by Faruk Imamovic
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EU Plans to Turn Russian Asset Profits into Ukrainian Defense Funds
© Getty Images/Sean Gallup

EU leaders are thinking about a bold plan to use about $3 billion every year from the extra money made from Russian assets that have been frozen. They want to use this money to help Ukraine in its fight. This topic is going to be talked about at an upcoming EU summit and it's a sign that the EU wants to do more to help Ukraine directly, especially with military support, during this tough time.

When German Chancellor Olaf Scholz got to the meeting, he was hopeful that everyone would be on board with the idea. He stressed how important it is to use this money to get the weapons and ammo that Ukraine really needs to defend itself.

This new plan goes beyond what the EU was thinking before, which was just to use the money they got from interest and other profits for rebuilding the country after the war.

Stepping Up Support

A top official from the EU shared that more and more European countries want to use this money for the European Peace Facility.

This was set up in 2021 to help pay for defense and military stuff all over the world. It's different from the usual EU budget because it can actually be used to buy weapons. This shift towards sending weapons comes as the situation in Ukraine gets even more serious, showing a real need for strong military support.

The need for the EU to offer more military help has become more urgent as the aid from the US has slowed down and Russia has been making moves. The US Senate had tried to get $60 billion for Ukraine's military help, but it got stuck because House Speaker Mike Johnson didn't let it go to a vote.

This has put more pressure on EU countries to increase their support.

Making Russia Pay

After Russia invaded Ukraine in a big way in February 2022, Western countries froze a lot of Russia's money abroad, around €300 billion ($327 billion), with a big chunk of it, about €200 billion ($218 billion), in the EU.

This money, kept safe by places like Euroclear, has been making a lot of interest. Euroclear said they made €5.2 billion ($5.6 billion) in interest from these frozen assets since 2022. The European Commission is thinking about putting a special tax on this unexpected interest money, hoping to get about €3 billion ($3.3 billion) every year to help Ukraine's defense.

Josep Borrell, the EU's top guy for foreign stuff, talked about moving from just giving financial support to actually giving physical military help. He said, "soldiers don't fight with banknotes." They need real weapons to protect their people.

The EU's plan is a big step towards helping Ukraine stand strong and start fixing things up, especially since Ukraine needs about $15 billion just for this year to rebuild important stuff like energy and transport.

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