EU’s Borrell to propose 90% of frozen Russian assets should go to European Peace Facility

The EU’s chief diplomat Josep Borrell said on Tuesday (19 March) he will table a proposal that would see 90% of the revenues from Russian assets frozen in Europe transferred into the European Peace Facility (EPF) and ultimately help Ukraine.

Under the proposal, 90% of the funds would be initially allocated to the European Peace Facility (EPF), the bloc’s mechanism to reimburse weapons delivered to Kyiv, and then to the newly created Ukraine Assistance Fund (UAF).

A small part would be withheld, which would be the share of EU member states unwilling to fund lethal weapons and instead undertake other tasks under the EPF.

According to the upcoming proposal, the remaining 10% would be transferred to the EU budget to be used to boost the capacity of the Ukrainian defence industry.

Speaking to a group of reporters in Brussels, Borrell stressed the proposal was to use profits from the immobilised Russian assets held in Europe rather than the assets themselves.

The step, he added, could see some €3 billion a year in additional funding until sanctions are lifted.

About €260 billion in assets of the Russian Central Bank, mostly in the form of securities and cash, have been immobilized by G7 countries, the EU, and Australia, with more than two-thirds of those blocked in the EU.

The vast majority of the funds has been frozen through the Belgium-based clearing house Euroclear, which said they had generated about €4.4 billion in profits last year.

Borrell told reporters he would submit the proposal to EU member states on Wednesday (20 March), ahead of a summit of EU leaders on Thursday, which he expected to discuss the proposal, and possibly see an agreement on the matter.

“The concrete proposal will be tabled tomorrow,” he said. “This is for [EU] member states to agree.”

However, EU officials and diplomats have cautioned that the timeframe might be too short to take a decision.

The search for additional funding has become especially critical as Ukraine faces a shortage of artillery and it remains unclear whether some $60 billion of US assistance will remain blocked in the US Congress.

[Edited by Zoran Radosavljevic]

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