The EU will allocate €1.4 billion in proceeds from frozen Russian assets to support Ukraine

The European Union will officially transfer €1.4 billion in interest income from the frozen assets of the Russian Central Bank to finance Ukraine’s needs. 

As reported by the European Commission’s press service on April 1, these funds were received by depositories as of March 31, writes the EP. According to European Commission President Ursula von der Leyen, the funding will go toward supporting public services and meeting the needs of the Ukrainian Armed Forces.

The funds will be distributed in two ways: 95% of the amount will be channeled through the Ukraine Loan Cooperation Mechanism (ULCM), and the remaining 5% through the European Peace Facility (EPF). The ULCM provides non-repayable assistance to service EU macro-financial loans and loans from G7 countries, totaling 45 billion euros. Meanwhile, funds from the European Peace Facility will be used to immediately address the Ukrainian military’s defense needs.

The decision to use the excess proceeds is based on the legal position that interest on frozen assets does not belong to the Russian Federation. This allows the EU to strengthen Ukraine’s financial stability without directly utilizing the frozen assets themselves. Despite Moscow’s attempts to block this process, the European Commission has reaffirmed its unwavering support and readiness to continue using the aggressor’s resources to restore stability in the region. Technical preparations for the tranches are currently underway to ensure their prompt transfer to the Ukrainian budget.

The European Commission has proposed an alternative route for Ukraine to obtain funding amid Hungary’s blocking of the main aid package. A letter from European Commissioner Marta Kos to Verkhovna Rada Speaker Ruslan Stefanchuk outlines a list of 11 laws whose adoption would allow Ukraine to attract up to €4 billion.

Hungaryblocks EU loan: the Orbán factor and new risks for Ukraine.