This meeting in Luxembourg is crucial, especially as it seeks to bypass opposition from Hungary, which has been resistant to such measures.
EU High Representative for Foreign Policy Josep Borrell, speaking to journalists before the meeting, emphasized the importance of utilizing the revenues generated from these frozen assets. He stated, "We have these revenues from frozen assets. We have to find a way to use them, avoiding any blocking. We have a process in place to make this work quickly. The first tranche of money will arrive next week in July. The second is in a few months. This money can't get stuck. They should be used - we have a legal procedure."
Financial Details and Legal Procedures
Borrell highlighted that approximately 2.5 billion euros could be directed to Ukraine. "Next week - one part of this 2.5 billion. The other part will be a little later," he noted. When questioned about how the funds could be utilized without Hungary's consent, Borrell explained that a legal mechanism exists to circumvent any blockage from member states not involved in the initial decision to accumulate these revenues.
"Since Hungary did not participate in the decision (to accumulate revenues from frozen Russian assets), there is no need for it to be able to participate in the implementation of the decision," Borrell pointed out, emphasizing the existence of a legal procedure to move forward without the need for unanimous consent.
Urgent Need for Support
Borrell underscored the urgency of the situation, linking it to recent geopolitical movements. "After the summit in Switzerland, where the diplomatic path was opened, there was a response from Putin, who goes to North Korea, travels everywhere he can get weapons. This shows that he is clearly preparing for a protracted war outside the diplomatic way... We must increase support for Ukraine," he stressed.
Expected Timelines and G7 Support
European Trade Commissioner Valdis Dombrovskis previously indicated that Ukraine might receive the first tranche of revenues from frozen Russian assets by the end of summer. Additionally, European Commission President Ursula von der Leyen announced that Ukraine would access the first 1.5 billion euros of income from these assets in July 2024.
The G7 countries agreed on June 13 to lend Ukraine approximately $50 billion by year-end, with repayments sourced from the profits of Russian sovereign assets. Reports from the Financial Times suggested that the United States is prepared to offer Ukraine a $50 billion loan secured by frozen Russian assets in Western nations.
Global Context and Legal Challenges
Around 210 billion euros of assets from the Bank of Russia have been frozen in Europe, with the total value of frozen assets of the Russian Central Bank worldwide estimated between 260 to 350 billion euros. While Western countries are exploring the possibility of confiscating these assets, legal complexities make using the proceeds from them a more viable immediate option.
The decision from today's EU foreign ministers' meeting could mark a significant step in supporting Ukraine amid its ongoing conflict with Russia, ensuring that financial aid is delivered promptly to bolster Ukraine's defense and reconstruction efforts.
