Funds from Russian assets worth 18 billion euros are due to be exhausted by the end of the year. The new approach will help preserve funding for Ukraine. About this Politico.
The European Commission is considering a plan to transfer almost €200 billion of frozen Russian state assets in Belgium to a new fund with riskier investments.
The goal is to generate higher revenues and support Ukraine's economy, despite threats from US President Donald Trump to cut off funding.
The assets were frozen in 2022 after Russia's full-scale invasion of Ukraine. The European Union is reluctant to confiscate them entirely, citing financial and legal risks, as countries such as Germany and Italy have already pointed out.
How to ensure the legality of transactions
The EU wants to spend only the income from investments, leaving the capital untouched, to avoid accusations of violating international law. The G7 group agreed last year to send 45 billion euros to Ukraine from the investment of frozen assets.
The EU's share of this aid was €18 billion, which is due to be disbursed by the end of the year. This calls into question the source of funding for Ukraine in 2026.
Discussions at the level of finance ministers
Finance ministers from the 27 EU countries will begin discussions on these issues at an informal dinner in Luxembourg. Poland, which holds the EU Council presidency, is asking the European Commission to present available options and consider using frozen assets.
In addition, Poland proposed using the new SAFE external defense financing scheme to purchase weapons for Ukraine.
The connection with sanctions and the role of Hungary
The creation of the fund will strengthen financial support for Ukraine and reduce the risk of sanctions being blocked by Hungary. The assets are blocked by the EU sanctions regime, which must be renewed every six months. Hungarian Prime Minister Orban threatens to use the veto as a "gesture of goodwill" to the Kremlin.
The European Commission has held consultations with France, Germany, Italy and Estonia, but has not yet found a way to keep the assets frozen without a unanimous decision.
Financial restrictions of the European Union
The EU plans to use a simple majority vote to create a new investment fund, which would bypass Hungary's veto. But critics warn that if the investments prove unprofitable, the costs will fall on taxpayers.
Currently, the EU's central budget of €1,2 trillion is overstretched, and the new budget framework will not come into force until 2028. At the same time, a significant part of the €50 billion allocated for aid to Ukraine has already been spent, and it is difficult to replenish the budget without unanimous approval, which Hungary will not give.
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