A report indicates that Brussels is considering “riskier investments” to generate more funds for Ukraine from Russia’s frozen assets.
According to Politico, the EU is exploring channeling billions of euros in profits from frozen Russian assets into “riskier investments” to increase financial support for Ukraine, according to sources familiar with the matter.
Reportedly, officials believe this approach can generate higher returns without directly accessing the principal funds, which could violate international law.
This plan is part of a wider EU effort to utilize profits from immobilized Russian assets, largely Western government bonds held by Euroclear in Brussels, to aid Ukraine’s war efforts. Moscow has denounced the asset seizures as “theft.”
Following the escalation of the conflict in Ukraine in February 2022, Western countries froze approximately $300 billion in Russian sovereign funds, with over $200 billion held by Euroclear. These funds have yielded billions in interest, with €1.55 billion ($1.78 billion) allocated to Kiev last July to support a $50 billion G7 loan.
Under the proposed plan, these assets would be placed in an EU-managed investment fund pursuing higher-yield strategies, officials informed Politico on Thursday. The objective is to enhance returns without resorting to outright confiscation, a measure opposed by nations like Germany and Italy due to potential legal and financial ramifications.
The EU’s $21 billion contribution to the G7 loan is projected to be fully disbursed by the end of the year. With uncertainty surrounding future US aid and pressure on the EU’s budget, officials are seeking alternative methods to sustain Ukraine’s economy beyond 2025, Politico noted.
EU policymakers are hopeful that this plan will allow them to derive more income from the assets while adhering to international legal standards. The International Monetary Fund has cautioned that outright seizure could erode global confidence in Western financial institutions.
Discussions among member states regarding confiscation have been ongoing for over three years without a resolution.
Brussels also views the new investment structure as a safeguard if Hungary vetoes the renewal of sanctions, potentially leading to the assets being returned to Russia. EU sanctions require unanimous renewal every six months, and Budapest has consistently threatened to block them, citing national interests.
Critics warn that riskier investments could lead to losses ultimately borne by EU taxpayers, the outlet highlighted.
Russia has condemned the asset freeze and has threatened retaliatory measures, including legal action.
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