Germany has changed its position on the use of frozen Russian assets and now supports the US proposal to use them to finance Ukraine.
Source. Bloomberg writes about this, citing sources familiar with the negotiations.
Germany's agreement could be a turning point in the long discussion, after which the EU will agree to a new aid plan for Kyiv and ensure that the United States will participate in it regardless of the outcome of the November 2024 elections. It is only about $50 billion of the frozen $300 billion in revenues.
The latest US proposal was received more positively in European capitals, including Berlin, as it involves simply using the interest generated by the assets without confiscating the principal, officials say.
EU countries have already agreed to tap into this revenue stream by taxing it at almost 100% and transferring the proceeds to Ukraine twice a year. The G7 agreement will replace this arrangement.
Earlier, the US proposed to use the frozen Russian assets themselves to help Ukraine. The EU has just approved the use of their proceeds. According to the new regulations, 90% of the proceeds – about €3 billion – will be sent to Ukraine.
They can be used for both reconstruction and military purposes. 10% of the funds will be temporarily withheld to cover its own risks.
The EU does not intend to transfer the proceeds of frozen assets to Russia even after the sanctions are lifted.
In total, $300 billion worth of assets have been frozen, most of which are placed in Europe in the European depository Euroclear. Since the beginning of 2024 alone, revenues have amounted to €1.6 billion. By 2027, revenues could be as high as €15-20 billion.
European officials are not ready to confiscate the assets themselves, considering it a violation of international law.
In addition, both the EU and the US fear Russia's retaliatory measures – confiscation of funds frozen on the Russian accounts of private foreign investors.
Among European countries, only the Estonian parliament has so far passed a law that would allow the frozen assets of Russians and Russian companies to be used to rebuild the war-affected territories of Ukraine.
The US, unlike the EU, would like to spend the frozen assets themselves.
In April, the House of Representatives already approved a bill that would allow Ukraine to receive about $6bn of the frozen $300bn in reserves. The decision may be made at the G7 summit in Brindisi, Italy, on 13-15 June.
Background. The day before, Czech Foreign Minister Jan Lipavsky said that the EU would use the proceeds from Russian assets to help Ukraine. According to him, this year alone, it will amount to about €3 billion.