EU Leaders Back Proposal to Arm Ukraine with Frozen Russian Assets

Late on Thursday evening, the European Union's 27 leaders gave their support to Brussels' proposal to allocate up to €3 billion annually to Ukraine from interest earned on frozen Russian assets held in depositaries across EU member states. The majority of these funds will be directed towards arming and equipping the Ukrainian armed forces in their ongoing resistance against Russia's aggression.

European Commission President Ursula von der Leyen expressed her satisfaction with leaders' endorsement, highlighting the strong support for utilizing windfall profits from immobilized assets for Ukraine's military needs. She emphasized the importance of swift action, suggesting that the first billion could be disbursed as early as July 1st, contingent upon the conclusion of the proposal.

Under Brussels' plan, 90% of the proceeds will be channeled through the European Peace Facility, which reimburses member states for arms donations to Ukraine, while the remaining 10% will fund post-war reconstruction efforts.

Despite opposition from some militarily non-aligned countries like Austria and Ireland, leaders proceeded with the endorsement. Austrian Chancellor Karl Nehammer emphasized the need for safeguards to ensure that donations from neutral countries are not used for military purposes, advocating for investments in reconstruction instead.

Ireland's Taoiseach Leo Varadkar affirmed his country's commitment to stand by Ukraine despite its military neutrality.

The decision also disregarded concerns from the European Central Bank regarding potential damage to the euro's credibility as a global reserve currency, signaling the bloc's willingness to deviate from norms to meet Ukraine's urgent needs.

The proposal taps into around €210 billion in Russian central bank assets immobilized in the EU since the onset of Moscow's invasion of Ukraine in 2022. However, the utilization of these assets comes with legal risks, prompting Brussels to proceed cautiously.

German Chancellor Olaf Scholz assured that the funds, not owed to anyone, would primarily serve Ukraine's defensive needs, particularly in acquiring weapons and ammunition.

Belgian Prime Minister Alexander de Croo emphasized the importance of a "bullet-proof" legal framework for utilizing the funds and stressed the priority of bolstering Ukraine's ammunition supplies to maintain its defensive posture.

Facing criticism for failing to meet its ammunition supply target to Kyiv, the EU has been urged to step up support. Member states have launched initiatives to supplement EU efforts, with Sweden and Portugal pledging significant financial contributions to aid Ukraine's defense efforts.