The European Commission announced the first payment of excess profits from the use of frozen Russian assets in the European Union in July 2024. The statement has been published on the European Commission website.
Valdis Dombrovskis, Executive Vice President for Economic Affairs, welcomed the official decision adopted by the European Council, which will allow the EU to profit from the assets of the Russian Central Bank, which are blocked under sanctions because of Russia’s war in Ukraine.
“The EU has chosen a way forward that is legally sound, and flexible so that support can adjust to Ukraine’s most pressing needs. Speed remains of the essence and the Commission will continue making all efforts to allow the first payment to be made already in July,” Dombrovskis said.
On May 21, the EU Council approved the transfer of proceeds from taxed excess profits of frozen Russian assets to Ukraine.
Seized funds will be used for weapons for Ukraine and country reconstruction needs
The decisions will enter into force after publication in the Official Journal. With biannual disbursements, the resources to support Ukraine will be available in July 2024.
In 2024, the European Union will allocate all the funds received from Russian assets to the Ukraine Facility, a four-year program to provide economic assistance to Ukraine, the European Commission said in a statement. According to the Commission, it is about 2.5–3 billion euros.
From there, as the EU Council has already reported, 90% of the funds will go to the European Peace Fund to supply Ukraine with weapons, and the remaining 10% will go to the EU budget for reconstruction needs.
The decisions allow prioritizing needs that are likely to change over time, so the allocation will be reviewed annually, with the first review by January 1, 2025, the European Commission added.
EU’s decision to seize Russian assets
On November 30, the US Senate introduced a bill to confiscate Russian assets. On January 11, the Biden administration supported the confiscation of Russian assets for transfer to Ukraine.
At the same time, Russia estimated that the West could lose assets and investments worth at least $288 billion if it confiscated frozen Russian assets to help rebuild Ukraine and said Moscow would retaliate.
On January 23, Belgian Ambassador to the United States Jean-Arthur Regibeau said that Western countries should make a collective decision to confiscate frozen Russian assets, most of which are stored in the Brussels-based Euroclear settlement center.
A U.S. Senate committee later approved a bill to confiscate Russian assets and transfer them to Ukraine, and on January 30, the Political Affairs Committee of the Parliamentary Assembly of the Council of Europe adopted a draft resolution that provides for the confiscation of frozen Russian assets and their transfer to a new fund for Ukraine’s recovery from Russia’s war impact.
Later, reports stated that Russia had stored 191 billion out of 260 billion euros of its frozen foreign assets in Europe, which generated 4.4 billion euros in profit in 2023, with plans to transfer them to Ukraine.
On February 12, the EU Council decided to regulate the future mechanism for using profits from frozen Russian assets in the EU in favor of Ukraine.
On May 8, the EU ambassadors agreed to use the proceeds from frozen Russian assets to rebuild Ukraine and defend it against the Russian military invasion.
