European Union transfers $1.6 billion raised from frozen Russian assets to Ukraine

The European Union announced Friday it had made 1.5 billion euros ($1.6 billion) available to support Ukraine, the first tranche of money generated from profits on frozen Russian assets.

In May, the EU’s 27 member states reached an agreement to use the interest earned on some 210 billion euros ($225 billion) in Russian central bank assets for military support for Ukraine and rebuilding efforts in the war-torn country.

The money, most of which is held in Belgium, was frozen as part of sanctions packages in retaliation for Moscow’s full-scale invasion. Brussels estimates that the interest on those assets could provide around 3 billion euros each year.

“The EU stands with Ukraine. Today we transfer 1.5 billion euros in proceeds from immobilised Russian assets to the defence and reconstruction of Ukraine. There is no better symbol or use for the Kremlin’s money than to make Ukraine and all of Europe a safer place to live,” European Commission president Ursula von der Leyen said in a statement.

The move comes days after Moscow announced it had recaptured two villages in Eastern Ukraine. A recent push by Kremlin forces in eastern and northeastern Ukraine has made incremental gains and Kyiv is worried that without financial support, Russia may advance further.

EU headquarters said that 90 per cent of the money would be put into a special fund known as the European Peace Facility that many EU countries already use to get reimbursed for arms and ammunition they send to Ukraine.

The other 10% would be put into the EU budget. The programs that this money funds would help to bolster Ukraine’s defense industry or to help with reconstruction, should some countries object to their share being used for military purposes.