EU plans to boost profits from frozen Russian assets – Politico

Politico reported the information.

Four officials told the outlet that the European Commission is weighing a plan to shift nearly €200 billion in frozen Russian assets, currently held in Belgium, into a new investment fund offering higher returns.

The goal is to generate more profit to support Ukraine’s economy, especially as U.S. president Donald Trump threatens to cut American aid.

However, the plan does not involve full confiscation of the assets, which is an option opposed by several EU states, including Germany and Italy, due to legal and financial risks.

Politico notes that by using only the interest while keeping the principal untouched, the EU hopes to sidestep any claims of breaking international law.

Last year, the G7 countries agreed to send €45 billion to Ukraine using income from frozen Russian assets. The EU’s portion was €18 billion, expected to be disbursed by year-end, leaving future Ukraine funding, especially in 2026, uncertain.

EU finance ministers from all 27 member states are expected to begin talks on the plan during an informal dinner on Thursday, June 19, in Luxembourg.

It is important that the Commission discusses the options available, in particular on the potential use of frozen Russian assets and further steps in the sanctions regime, mentions an invitation letter from Poland, which currently holds the EU Council presidency. The letter was obtained by Politico.

Poland has also suggested using the new SAFE defense financing scheme to purchase weapons for Ukraine.

Thursday’s dinner will kick off months of tense debate, Politico writes, as European governments wrestle with shrinking budgets and growing pressure to prioritize domestic needs over Ukraine.

EU’s workaround plan

One option being discussed is moving the assets from Euroclear in Belgium into a special EU investment fund.

The main benefit: the EU could put those funds into higher-yield investments that might provide Ukraine with more substantial financial returns. Officials didn’t specify what types of investments are being considered.

Under Euroclear rules, many of the assets, already converted into liquid cash, must be held at Belgium’s central bank, which pays out the lowest risk-free interest.

In 2024, those investments earned €4 billion, which went toward covering the G7 loan to Ukraine.

Backers of the new fund say the EU should tap more income from Russia’s sovereign wealth to support Ukraine long-term, especially as peace talks with Moscow stall.

Another possible advantage: it could protect the EU if Hungary vetoes sanctions renewal and tries to unblock the funds for Russia.

Russian assets are frozen under an EU sanctions regime that must be extended every six months. Hungary has repeatedly threatened to use its veto as a political gesture toward Moscow.

According to two officials, the Commission has held informal talks with countries like France, Germany, Italy, and Estonia to find legal options for keeping assets frozen if Hungary blocks the next sanctions renewal.

The EU plans to use a simple majority vote to set up the new investment fund, bypassing Hungary’s veto. But critics warn that if the fund underperforms, taxpayers could be stuck with the losses.

The EU is trying to get creative as its central €1.2 trillion budget is stretched thin and the next budget won’t kick in until 2028.

It will not be easy to find the money within the current multiannual financial framework, said one European diplomat.

Much of the €50 billion Ukraine support package, approved in 2023 and running through 2027, has already been spent.

Along with budget limits, there’s little appetite for topping up the central EU budget, since that would require unanimous support, and Hungary is expected to block it.

• On June 13, Ukraine received €1 billion from the EU, its first payout from profits on frozen Russian assets.