EU plays risky game with Russia’s frozen assets
(MENAFN)
The European Union is considering investing the profits from frozen Russian assets into higher-risk ventures to increase funding for Ukraine’s war effort, according to sources cited by Politico. This strategy aims to boost returns without directly using the frozen sovereign funds themselves, which would violate international law.
The European Union is considering investing the profits from frozen Russian assets into higher-risk ventures to increase funding for Ukraine’s war effort, according to sources cited by Politico. This strategy aims to boost returns without directly using the frozen sovereign funds themselves, which would violate international law.
The initiative focuses on utilizing earnings from Russian assets, mainly Western government bonds held by the Brussels-based clearing house Euroclear, to support Ukraine. Russia has condemned the freezing of its assets as “theft.” Since the conflict escalated in February 2022, Western countries froze roughly $300 billion in Russian sovereign funds, with over $200 billion held by Euroclear. These assets have accrued billions in interest, including €1.55 billion ($1.78 billion) transferred to Kyiv last July as part of a $50 billion G7 loan.
The new proposal would place these assets into an EU-managed investment fund pursuing strategies with potentially higher yields. Officials stressed that this approach avoids outright confiscation, a step opposed by countries like Germany and Italy due to legal and financial risks.
The EU’s $21 billion portion of the G7 loan is expected to be fully disbursed by year-end. With future US support uncertain and budget constraints in the EU, officials are seeking alternative ways to sustain Ukraine’s economy beyond 2025.
EU policymakers hope this plan can generate more revenue while adhering to international legal standards. The International Monetary Fund has warned that confiscation could undermine global trust in Western financial institutions. Negotiations among EU members on asset confiscation have stalled for over three years.
The investment fund is also seen as a contingency if Hungary blocks the renewal of sanctions—something Budapest has threatened due to national interests. EU sanctions require unanimous renewal every six months, and a veto could force the return of assets to Russia.
Critics warn that riskier investments may lead to financial losses, potentially affecting EU taxpayers. Russia continues to denounce the asset freezes and has threatened legal retaliation.
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