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Ursula von der Leyen said windfall profits from frozen Russian assets should be used to buy weapons for Ukraine as discussions intensify among European allies on how to continue supporting the war-torn country.
The proposal is the latest idea for how to use the roughly 300 billion euros of Russian sovereign assets frozen by G7 allies in response to Moscow’s full-scale invasion of Ukraine two years ago, amid a lack of consensus on the legality of using the funds and the most appropriate way to do so.
“It is time to start a dialogue on using windfall profits from frozen Russian assets to jointly purchase military equipment for Ukraine,” the European Commission president said in a speech to EU lawmakers on Wednesday.
“There couldn’t be a stronger symbol and better use of that money to make Ukraine and all of Europe a safer place to live,” he added.
His statement represents the first time the EU has linked the use of frozen Russian sovereign assets to potential arms purchases and comes amid growing friction among Western allies over how to support Ukraine. After French President Emmanuel Macron suggested that the deployment of Western troops to Ukraine could not be ruled out, Berlin told Paris to “provide more weapons” to Kiev.
A senior EU diplomat said “we are broadly supportive” of Von der Leyen’s proposal, adding that the 27 member states “so far have focused on using this money for reconstruction, but there is no denying that the weapons are the pressing issue at this time.” the moment, so it makes more sense.
Previous discussions have focused on moving the proceeds into the EU budget as a channel to invest in the country’s reconstruction. Using them for weapons could involve a different channel, such as the European Peace Fund or other EU mechanisms used to buy ammunition directly from manufacturers, the senior diplomat added.
“We agreed that they should be dedicated to reconstruction ‘in particular’,” they added. “Which gives us room to use them for other things if there’s a need for them in an emergency, like weapons right now.”
Negotiations over an EU fund used to reimburse governments for supplying weapons to Ukraine are also stalled due to disagreements over rules governing the facility, with France reiterating its position that EU money should be used to purchase weapons produced in the block.
In parallel, EU countries have been trying to raise 1.5 billion euros to buy foreign-made weapons for Ukraine under a backup plan led by the Czech Republic.
The situation is becoming increasingly urgent as Ukraine warns its allies that its ammunition is dangerously low. Kiev said it particularly needed long-range weapons to damage Russia’s military logistics.
“The threat of war may not be imminent, but it is not impossible,” von der Leyen said, outlining plans for a European defense industrial strategy that would include proposals for joint arms purchases for EU countries , a model that the bloc has already adopted. used to buy Covid-19 vaccines and natural gas after Russia cut exports to the bloc.
The United States has pushed its G7 allies to confiscate around 300 billion euros in frozen Russian sovereign assets, most of which are held in Belgium. But EU countries remain concerned about the risk of retaliatory measures from Moscow.
The EU has been focusing on profits from 191 billion euros of Russian state assets that are piling up as the bonds reach maturity and Belgian central depository Euroclear reinvests them. Member countries agreed last month to set aside these profits in a separate escrow account as a first step towards allocating them to Ukraine. The Commission estimates that this could generate around €3 billion per year, depending on interest rates.
But doubts about profit confiscation persist, with countries such as France, Germany and Italy urging caution. To decide on the use of these extraordinary profits, unanimity of the 27 EU member states is required.
Since announcing her intention to run for a second term at the helm of the EU executive, von der Leyen has made advocacy a central part of her re-election campaign.
He said Wednesday that he was “personally supportive” of appointing a defense commissioner in the next term.
Von der Leyen also welcomed the European Investment Bank’s commitment to increasing defense investment.