The EU is ready to "turn money into a weapon" to help Ukraine fight Russia

The European Union (EU) aims to take advantage of Russia's frozen assets to send 3 billion Euros per year to Ukraine, the European Commission (EC) - the EU's executive agency - said on March 20. 3, with the first payment likely to be made as soon as July.

The Central Bank of Russia (CBR) has around 210 billion Euros of foreign exchange in the EU – mainly at the Euroclear depository in Belgium – which has been frozen since hostilities broke out in early 2022.

Now, EU officials are proposing to use profits from those assets to support Ukraine, thereby fulfilling a promise that has long been delayed by concerns about the wider economic and political implications. from this unprecedented move.

Turn money into a weapon

According to the EU plan, 90% of the profits will go to an EU fund to supply weapons to Ukraine. The remaining 10% will go into the EU budget, where it will be used to help improve the capabilities of Ukraine's defense industry.

“Today we continue to put pressure on Russia and hold them accountable for their actions and for the enormous damage and suffering they have caused,” said EC Vice President and EU Trade Commissioner Valdis Dombrovskis said in a statement on March 20.

This move is coordinated with partners in the group of seven largest democracies in the world (G7), including the UK and the US, Mr. Dombrovskis added.

Last October, EU leaders asked Brussels to consider how to use the profits generated from CBR assets to support Ukraine without violating EU or international law.

Officials believe that, depending on interest rates, each year Russia's wealth could generate 2,5-3 billion Euros in after-tax profits, of which Euroclear is allowed to keep a small percentage, around 13%. , for administrative costs and liability.

The decision to use the above interest was made after the 27-nation bloc agreed to "inject" 5 billion Euros into the European Peace Facility (EPF) fund with the aim of increasing ammunition supplies to Ukraine, and At the same time, the EC disbursed the first 4,5 billion Euros from the new mechanism, the Ukraine Facility, to help the Eastern European country maintain the operation of the state apparatus.

But it also comes as battlefield conditions in Ukraine become increasingly fierce and as vital funding from the US is hindered by controversy in the "land of flowers" Congress.

Speaking in Brussels on March 20, Ukrainian Prime Minister Denys Shmyhal welcomed the EU's new proposal but said the use of interest was only the first step, because Kiev's request was "full confiscation or use according to the law". otherwise all (Russian) assets are frozen.”

Although the plans still require consensus from all 27 members of the bloc when leaders of member countries meet at the Summit on March 21-22, the EU's senior representative for foreign affairs Josep Borrell told Prime Minister Shmyhal: “Hopefully we can soon agree and exchange money for weapons, because Ukrainian soldiers cannot fight with banknotes.”

Damage is inevitable

Until this step, officials seemed unconcerned about the European Central Bank's (ECB) concerns that the move could have a broader impact on the euro's reputation as a reserve currency. global reserves.

Reacting to the EU's latest statement, the Kremlin said on March 20 that such plans - if implemented - would ruin Europe's reputation and lead to years of litigation.

“Europeans are well aware of the damage that such decisions can cause to their economy, image and reputation,” Kremlin spokesman Dmitry Peskov told reporters.

“Damage will be inevitable. The people involved in making such decisions, the countries that make these decisions, of course, they will be subject to prosecution for decades."

Russian Foreign Ministry spokeswoman Maria Zakharova also said on March 20 that Moscow will certainly respond to what the diplomat called "looting and theft.".

Minh Đức (According to Euronews, Reuters, Moscow Times)