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European Union leaders are scheduled to discuss on Thursday a proposal to use profits generated from locked-in assets to support Kiev. At a time when U.S. funding has stalled and Ukraine is in a desperate situation, the proposal could provide about $3 billion a year, mostly for weapons, for several years.
While the plan would certainly help Ukraine if approved, even its supporters had a hard time presenting it as a major victory. The EU’s top diplomat, Josep Borrell, said $3 billion a year was “not extraordinary” but “not negligible.”
The narrative of somehow mobilizing frozen assets to support Ukraine captured the mood in Europe as a bold declaration to deter Putin and stand with Ukraine until victory is won in the face of the harsh realities of war. ing.
Allies have been reeling in recent weeks with dire reports from the front lines and worrying signals from the United States, where funding to Ukraine has stalled and Republican presidential candidate Donald Trump has once again slammed NATO. There is.
When leaders arrived in Brussels on Thursday, there appeared to be broad agreement that the region needed to take further steps to prevent a victory for Russian President Vladimir Putin, but that Europe There was little confidence that Putin’s plans could be thwarted.
Belgian Prime Minister Alexander de Croo boldly said, “Of course we want to invest in recovery, but it’s a bit pointless to invest in recovery if there’s a risk of losing the country.”
The allies have decided to seize more than $300 billion in Russian central bank assets held abroad in 2022, including more than $200 billion in the European Union.
From the beginning, some member states wanted to use all their assets to support Ukraine. Others were cautious, raising questions about the legality and long-term impact of such a move.
For example, some officials, diplomats and experts worry that seizing Russian assets could prevent sovereign wealth funds, investors and central banks from investing in European assets. The European Central Bank warned that asset seizures could damage the euro. Some also fear that Russia will retaliate against European companies’ interests in Russia.
Talks about what to do with the transferred assets have been going on for months but appeared to be gaining momentum as U.S. aid to Ukraine stalled.
In the fall, U.S. officials stepped up efforts to induce Western governments to use hundreds of billions of dollars in frozen Russian central bank reserves to aid Ukraine.
Last month, Treasury Secretary Janet L. Yellen expressed strong support for the idea of liquidating and putting some $300 billion in frozen assets to use.
“It is important for our coalition to find ways to unlock the value of these locked-in assets to support Ukraine’s continued resistance and long-term recovery,” Yellen said in Sao Paulo, Brazil, according to the Associated Press. It is necessary and urgent.”
“We believe there is a strong international legal, economic and moral basis to move forward,” she said. “This will be a decisive response to Russia’s unprecedented threat to global stability.”
For now, Europe is only looking to extract a windfall. Many of the assets are held by Belgium-based financial services company Euroclear, so at least for now, Belgian authorities insist that the assets themselves be left untouched and some, but not all, of the profits used. I cooperated with the.
Under the plan, most of the profits generated by the frozen assets would go to Ukraine, but some would remain as a “buffer” for Russia to fund legal battles to recover the funds. Belgian and EU officials said this would be the case.
This year, 90% of the funds will go to weapons and 10% to promoting Ukraine’s arms industry. Officials have suggested Ukraine could get the money by the summer. But with ammunition and weapons in short supply, it is not clear exactly what and when Kiev will acquire it.
On Thursday, Estonian Prime Minister Kaja Kalas called the proposal a “first step.”
Of course, this was a step too far for Russia, with Foreign Ministry spokeswoman Maria Zakharova calling the plan “outright robbery and theft.”
“These actions are a grave and unprecedented violation of fundamental international norms,” she said, according to Russian media. She said, “We said we would comply, so we will.”
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