EU's Strategic Use of Russian Assets for Ukraine's Recovery

The EU plans to use immobilized Russian central bank assets to finance Ukraine's 2026-2027 defense and budget needs. These assets, valued at up to 165 billion euros, would be invested in zero-coupon European Commission bonds, allowing Ukraine access without asset confiscation. Risks involve delayed Russian reparations.

The European Union is exploring a strategic financial plan to support Ukraine's defense and budget needs for 2026 and 2027, leveraging Russian central bank assets that have been immobilized in the West following Moscow's invasion. The proposal aims to use these assets, worth up to 165 billion euros, to finance Ukraine without directly confiscating them, abiding by international laws on sovereign assets.

At the war's onset, Euroclear, the Belgian Central Securities Depository, held bonds for the Russian central bank. When these bonds matured, the subsequent cash was trapped due to EU sanctions. The EU's current plan involves investing this cash in zero-coupon bonds issued by the European Commission, allowing Ukraine to access the funds now and repay once it receives war reparations from Russia.

This plan involves significant financial risks, especially if Russia fails to pay war reparations. However, EU governments have agreed to keep immobilized Russian assets frozen, minimizing potential risks. The Kremlin has criticized the proposal as theft, warning of potential retaliations.

(With inputs from agencies.)