EU taps proceeds from frozen Russian assets – Borrell

The EU has made its first transfer of interest earned on Russia’s frozen central bank assets to Ukraine and other states aiding Kiev, the bloc’s chief diplomat, Josep Borrell, announced on Thursday. A total of €1.4 billion ($1.5 billion) was transferred, he said.

Speaking to reporters ahead of a meeting with EU foreign ministers, Borrell called the development “good news” and said that the funds would be used for Kiev’s military needs and to finance Ukrainian industry.

“We have started using the revenues from windfall profits from frozen Russian assets. [They] have already been sent to Ukraine and sent to the member states who will provide with this money more military equipment to Ukraine,” Borrell stated. He stressed that the frozen assets have allowed the EU to change “the financial logic” of aid, making it possible to “give money directly to Ukraine.”

“Until now, the European Peace Facility was reimbursing the money to the member states that provided support to Ukraine. Now this money comes from the Russian frozen assets… For the first time, we are financing directly the Ukrainian industry,” Borrell added.

Western states froze an estimated $300 billion in Russian sovereign assets after the onset of the Ukraine conflict in early 2022. While the West has so far failed to agree on seizing the money outright, the EU in May approved a plan to use the interest earned on the funds, totaling approximately €3 billion annually. Under the scheme, 90% of the proceeds are earmarked for the European Peace Facility, an EU-run fund dedicated to providing military aid to Ukraine, while the other 10% will go to the Ukraine Facility, charged with covering the country’s reconstruction needs.

The EU first announced in late July that €1.6 billion in interest earned on the Russian assets would be made available to Kiev. It is unclear from Borrell’s remarks, however, whether the funds earmarked for the Ukraine Facility, which would theoretically constitute the difference between the €1.6 billion announced in July and the €1.4 billion mentioned by Borrell on Thursday, have been delivered yet.

Moscow has repeatedly criticized the West for the asset freeze, calling it illegal, and warning retaliation if the funds are confiscated or tapped. Commenting on Borrell’s announcement, Kremlin spokesman Dmitry Peskov slammed the EU’s move as “theft” and “illegal expropriation,” warning that it would have “legal consequences.”