EU's Plan to Divert Frozen Russian Assets to Ukraine Sparks Concerns as Diplomat Warns of Potential Consequences

A Russian diplomat has expressed concerns regarding the European Union's decision to divert profits from frozen assets of the Russian central bank to Ukraine, suggesting that it could lead to "unforeseen" consequences. According to statements reported by the TASS news agency, Kirill Logdinov, head of Russia's diplomatic mission to the EU, emphasized the potential ramifications of this move, hinting at future repercussions for the EU.

The EU's approval of using a portion of the profits from frozen Russian assets to aid Ukraine's reconstruction and defense efforts was confirmed on Tuesday, as reported by Bloomberg. This decision is expected to result in a substantial financial injection for Ukraine, potentially amounting to up to 3 billion euros ($3.3 billion) this year. Czech Foreign Minister Jan Lipavsky further elaborated on social media platform X, indicating that a significant portion—around 90 percent—of the allocated funds will be directed towards bolstering Ukraine's military capabilities.

Meanwhile, Ukrainian President Volodymyr Zelensky has asserted that the Ukrainian armed forces have made significant progress in the Kharkiv region, which has been a focal point of Russian aggression since May 10. Zelensky's remarks underline the ongoing military efforts and resilience of Ukraine in the face of Russian incursions.

Since the onset of Russia's invasion of Ukraine in 2022, the G7 nations have collectively frozen approximately $280 billion in assets, with a substantial portion held within the EU. The primary custodian of these funds, Belgium-based settlement giant Euroclear, has reported significant net profits—approximately €3.9 billion—generated from these frozen assets since last year.

In parallel, the United States has proposed an alternative plan that aims to utilize future proceeds from frozen assets to support a substantial $50 billion loan to Ukraine. This proposal, if approved by the G7, would supersede the EU's initiative and potentially offer additional financial support to Ukraine.

Under the EU's plan, Ukraine is set to receive net profits calculated from February 15 onwards. Euroclear's first-quarter financial results reveal that approximately 159 billion euros of frozen Russian assets have yielded a net profit of 557 million euros since that specific date. These figures underscore the significant financial implications of the EU's decision and its potential impact on Ukraine's ongoing efforts to withstand Russian aggression.

By fLEXI tEAM