The European Union is seeking new resources for Ukraine by leveraging frozen Russian assets through the establishment of a €200 billion investment fund that could yield higher returns.

This was reported by Politico, citing its sources.

Plans for EU to raise funds for Ukraine from frozen Russian assets

It is noted that some EU countries, such as Germany and Italy, oppose this move due to potential legal and financial challenges. However, the EU hopes that using only the interest from these assets will help avoid accusations of violating international law.

EU officials are considering transferring assets from the Belgian financial institution Euroclear, where most of the frozen funds are currently held, into a specially created fund managed by the EU.

As Politico reports, the advantage of such a fund lies in its ability to invest in riskier projects that could potentially yield significantly higher profits for Ukraine. However, the specifics of the potential investments remain unknown.

According to existing regulations, Euroclear is required to invest assets, many of which have already been converted to cash, in the Belgian central bank, where the returns are minimal due to the risk-free nature of the investment.

Proponents of the new fund believe the EU should derive greater profits from Russian state funds to be able to support Ukraine in the long run, especially considering the prolonged peace negotiations with Russia.

Another possible advantage of this approach is that the new fund could safeguard assets from the risk of Hungary vetoing the extension of sanctions, effectively returning those funds to Russia.

According to two sources, the European Commission has been holding unofficial discussions in recent weeks with countries such as France, Germany, Italy, and Estonia to find a legal way to keep the assets frozen, even if Hungary blocks the extension of sanctions. However, no final decision has been reached yet.

Critics warn that if the new fund makes unsuccessful investments, EU taxpayers may have to cover the resulting losses.

The EU is searching for unconventional financial options as its current budget of €1.2 trillion is already overloaded, and a new multiannual financial framework will not come into effect until 2028.

“Finding money within the current budget will be very challenging,” noted one diplomat in a comment to the publication.

Moreover, due to economic constraints and the need for a unanimous decision to replenish the budget, officials are skeptical about achieving this, especially since Hungary is likely to oppose such a move.