FX.co ★ EU endorses US plan to tap frozen Russian assets to help Ukraine

Frozen Russian assets have become a stumbling block for European and American leaders. The debate over a proposal to permanently seize Russian assets to pay for war damage has been raging for a long time. While the European Union is not going to confiscate Russian assets, it has endorsed the US intention to do so.

According to Josep Borrell, high representative of the EU for foreign affairs and security, the decision of the US Congress to approve a package of financial assistance to Ukraine, including the use of funds from the Russian central bank, is "a good thing." Notably, these assets were frozen by the United States after Moscow's invasion of Ukraine in February 2022. Their fate had long remained uncertain. However, on April 23, 2024, the Senate overwhelmingly passed a bill to provide $61 billion in aid to Kyiv, which was later signed into law by US President Joe Biden. The legislation includes a clause authorizing the US Secretary of State to seize and use Russian assets frozen in the United States to help Ukraine.

Borrell highlighted that the initiative concerns only the use of windfall profits generated by immobilized Russian assets. "Not the capital but the revenues," the European leader stressed. At the same time, he left open the possibility that the EU authorities could make a different decision regarding frozen Russian assets in the future.

"Well, for the time being, we are going to take the revenues of the capital which, according to the legal services, is fully in accordance with international law," Borrell said, adding that it would not be a double standard, as previously stated by ECB President Christine Lagarde.

The EU's top diplomat believes that Europeans should act more decisively amid the ongoing Russian-Ukrainian conflict. "It is a matter of European strategic responsibility," Borrell said. Still, the EU is not ready for such drastic measures as confiscating Russian central bank assets. After numerous discussions and consultations, the European authorities decided to use only profits from frozen Russian central bank assets. "For the time being, we are not going to seize the capital because there is not enough clarity about what we can do and what we cannot do," the EU foreign policy chief summed up.