The bloc is considering a proposal to spend 90% of income from Moscow’s frozen funds to procure arms for Kiev
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The EU’s plan to seize revenues generated by frozen Russian assets and use them to provide military aid for Ukraine is likely to fail, Deutsche Welle reported on Thursday, citing Hungarian opposition to the proposal.
The EU’s foreign policy chief, Josep Borrell, on Wednesday proposed allocating 90% of the income from the funds to procure more arms for Kiev, which has increasingly complained of ammunition and weapons shortages on the front lines. The remaining 10% of income from the funds would be transferred to the EU budget and used to support Kiev’s defense industry.
According to DW, however, the proposal could be blocked by Hungary. Citing an anonymous EU official, the outlet reported that Budapest will not support any plan that involves spending on weapons for Ukraine.
The source added that, aside from Hungary, there is general agreement among most of the bloc’s members that using the funds to provide arms is the best way to support Kiev in its fight against Russia.
“Ukraine needs more money for weapons, unfortunately, not for reconstruction. And we are striving to do everything to avoid further destruction in Ukraine,” the person stated.
In order to be passed, the proposal requires unanimous approval from all the bloc’s 27 member-states, and would likely be scrapped if Hungary vetoes it. Unlike many of its EU peers, Budapest has not been blindly supportive of Ukraine in the conflict, refusing to send weapons to Kiev and opposing certain economic sanctions on Russia.
EU leaders are expected to discuss the plan during a summit in Brussels later on Thursday.
Following the start of the Ukraine conflict in early 2022, Western countries imposed unprecedented sanctions on Moscow and blocked around $300 billion in assets belonging to Russia’s central bank. Roughly €191 billion ($208 billion) of these funds are held in the EU’s major clearing house, Euroclear, where they generated roughly €4.4 billion ($4.8 billion) in interest income in 2023 alone. Last month, European Commission President Ursula von der Leyen suggested using this income as aid for Ukraine, and the bloc has been mulling the idea ever since.
While some Western officials have spoken in favor of the plan, and the US has even insisted on an outright seizure of the frozen assets themselves, numerous experts and policymakers have warned that this would violate international law and jeopardize the EU’s financial reputation. Moscow has repeatedly denounced the blocking of the funds as “theft,” and has cautioned that any measures taken against its assets will face a tit-for-tat response.
