The European Union aims to secure fresh funding for Ukraine by utilizing frozen Russian assets through the establishment of a new investment fund worth 200 billion euros, which could provide higher returns.
This was reported by the publication Politico, citing its own sources.
How the EU plans to finance Ukraine using frozen Russian assets
Some EU member states, such as Germany and Italy, have voiced concerns regarding potential financial risks. However, the EU hopes that using only the interest from these assets will help avoid legal complications.
EU officials are considering transferring assets from Euroclear, a Belgian financial institution, into a newly created fund managed by the EU.
As Politico notes, the advantage of such a fund lies in the ability to invest in riskier projects that could yield significantly higher profits for Ukraine. However, details regarding the specific investments remain unclear.
Current regulations require Euroclear to invest assets, many of which have already been converted to cash, into the Belgian central bank, where returns are minimal.
Proponents of the new fund argue that the EU should garner more profits from Russian state assets to sustain long-term support for Ukraine, especially in light of prolonged peace negotiations with Russia.
Another potential benefit of this approach is that the new fund could safeguard assets against the risk of Hungary vetoing the extension of sanctions and effectively returning these funds to Russia.
According to two sources, in recent weeks, the European Commission has held informal discussions with countries like France, Germany, Italy, and Estonia to find a legal way to maintain the frozen status of the assets, even if Hungary blocks the extension of sanctions. However, a final decision has yet to be reached.
Critics warn that if the new fund makes unsuccessful investments, taxpayers in EU countries may have to cover the losses.
The EU is seeking unconventional financial options, as its current budget of 1.2 trillion euros is already overloaded, and a new multiannual financial plan will not take effect until 2028.
“Finding money within the current budget will be very challenging,” – one diplomat commented to the publication.
Moreover, due to economic constraints and the need for unanimous decisions to replenish the budget, officials doubt that this can be achieved, especially since Hungary is likely to oppose such a move.
