Foreign Affairs Council of the European Union has adopted a set of legal acts redirecting all the extraordinary revenues generated by sanctioned russian assets in the EU towards helping Ukraine. As specified in the statement following today's meeting of the Council, 90% of the profits will finance military provisions, upgrade and rebuild Ukraine's defense industry, and 10% will go to the humanitarian reconstruction of Ukraine.
The EU law starts counting the net profit from February 15th, 2024, meaning the extraordinary gains from the first two years of the war remain unaccounted. Nonetheless, the sum is considerable: Kyiv can already expect up to EUR 3 billion injected into its military machine this year, according to Jan Lipavský, the Foreign Affairs Minister representing the Czech Republic at the Council.
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We have approved in the EU using revenues from Russia's central bank's frozen assets to help Ukraine.Up to €3B only this year, 90% goes for Ukraine's military. Russia must pay for its war damages.— Jan Lipavský (@JanLipavsky) May 21, 2024
More specifically, the mentioned 90% of profits will go to the European Peace Facility. While the particular items planned to be procured with these funds are not mentioned and quite probably are yet to be decided, earlier within the framework of this program EU (and Norway as a non-EU state) had secured vital 155mm ammunition and air defense missiles supplies, as well as abroad training for the personnel of the Ukrainian Armed Forces, and more.
For comparison: from February 2022 to this day, European countries have provided over €33 billion, a third of it coming from this joint fund and the rest provided on a bilateral basis between Ukraine and member states. But it's not just about gifts. Some 0.5B of these finances went to ramping up ammunition production in the European Union itself, so the local manufacturers can invest more in expanding their capacities.
The "money engine" powering this newly established mechanism are windfall net profits from the russian Central Bank assets. Suspilne Media estimates there are about €260 bln ($280 approx.) of this bank's assets worldwide, ⅔ of this money is within the EU. Reuters' assessment is $300 worldwide, including an equivalent to $207 in euro assets.
Besides the European Union, the topic of using russian assets to help Ukraine in its war against russia is being discussed in the United States, though there's still uncertainty about how it will be implemented. One way is to confiscate the money and another is to introduce a law mechanism similar to the one just greenlighted by the EU where the sovereign capital remains untouched, only the profits it generates are used.
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