In the latest round of escalation, the European Union has agreed to transfer about $3 billion worth of frozen Russian assets to Ukraine.
After Washington’s strong demand, the frozen assets will be used for Kyiv to buy weapons and to fund reconstruction efforts in Ukraine.
In February 2022, when the Russians invaded Belgium, Brussels frozen $250 billion of assets that belonged to the Central Bank in Moscow and were held at Euroclear Depositary in Belgium.
Under pressure from the United States the G7 nations agreed to send Russian deposits that were held in Western countries to Kyiv to help it as its military situation became increasingly desperate.
The House of Representatives voted earlier to approve a measure to transfer $95 billion of Russian assets in the United States back to Ukraine.
After Brussels reached a compromise over the amount of tax revenue that could be collected on the frozen deposit, EU diplomats approved the proposal to transfer some of the cash in Belgium to Ukraine.
Belgian policymakers have long suggested sending some of interest collected from the funds to Ukraine, estimated at $3.2 billion per year.
Brussels had pledged to Ukraine, via a national trust fund, about $1 billion of the $1.7 billion tax revenue from existing profits. This was reported by Politico.
The Belgian government tweeted: “The money will be used to support the recovery of #Ukraine and its military defence, in context with the Russian aggression.”
The pledged amount of 90% will be spent to purchase weapons. 10% will be spent for non-military assistance.
In the course of negotiations, Belgium was also able to achieve a concession that reduced the handling fee charged by Euroclear on frozen assets from 3% to just 0.3%.
The EU has made other concessions, such as allowing Austria, Ireland and Malta to limit their assistance to humanitarian aid and not buy weapons.
Ursula von der Leyen, President of the European Commission, said that Ukraine may receive the first funds as part of the new agreement in July.
The EU Foreign Ministers have also agreed formally to a separate EU proposal, which would grant Kyiv grants and loans totaling $53 billion as a reward for certain reforms.
Officials from Ukraine said the plan was not enough, and that Brussels should seize all Russian assets in order to ensure that Moscow pays for the costs of the war.
Some European economists worry that sending the frozen assets for funding the Ukrainian war effort could damage the reputation of the EU as a place where other nations can store their currency safely and set a dangerous precedent.
