The reported plan seeks to give the US guarantees that the West would be able to tap into the immobilized funds for as long as needed
The EU is considering a plan to freeze Russian assets indefinitely to address US concerns about whether a $50 billion loan to Ukraine would be repaid, the Financial Times reported on Wednesday, citing internal documents.
The EU has frozen more than €200 billion ($217 billion) in Russian central bank assets since the start of the Ukraine conflict in February 2022, a move denounced by Moscow as “theft.”
While Western countries have not reached an agreement on outright confiscation of the funds to support Ukraine due to legal concerns, the EU has proposed using the interest generated from frozen assets to finance a fund for procuring weapons for Kiev, with an estimated annual sum of around €3 billion ($3.25 billion). The EU’s top diplomat, Josep Borrell, stated this week that the initial tranche of roughly €1.4 billion ($1.5 billion) will be sent to Kiev in early August.
In this regard, G7 members agreed in June to provide Ukraine with a $50 billion loan to be financed by interest from the frozen Russian assets. However, the US has expressed concerns about whether the loan would ultimately be repaid, considering the bloc renews its sanctions against Moscow every six months.
According to the document referenced by the FT, to alleviate these concerns, 27 EU ambassadors will meet on Wednesday to discuss a proposal for the “open-ended immobilization of the Central Bank of Russia assets.” The plan reportedly aims to “provide G7 partners with the highest degree of predictability” regarding loan repayment.
The British newspaper noted that while the document offers another solution to the credibility issue – specifically, extending the renewal of sanctions from every six months to up to three years – only the option of indefinite sanctions would satisfy Washington.
“Option one is the only option. It’s difficult, but it’s the only route that gives certainty and is feasible,” an FT source said.
The plan must be approved by all EU members, which could prove challenging given that Hungary – a frequent critic of Ukraine aid – has stalled similar efforts in the past, the article stated.
Kremlin spokesman Dmitry Peskov has stated that the EU’s effort to utilize the “stolen” funds to purchase weapons for Ukraine “won’t go unreciprocated.” He added that Moscow is exploring ways to impose legal consequences on anyone involved in the decision to use profits from Russian assets.