EU starts distributing frozen Russian billions to Western investors instead of Ukraine
6 June 15:32
The Ukrainian government has expressed outrage at the decision of European countries to allocate part of the frozen Russian funds not to help Ukraine, but to compensate Western investors. This was reported by "Komersant Ukrainian" with reference to Reuters.
Ukraine is no longer a priority
Last month, the Belgian clearing company Euroclear distributed 3 billion euros of Russian funds among Western investors who lost their assets due to Moscow’s actions. This is exactly the money that European officials promised to transfer to help Ukraine.
“If private investors receive compensation before the victims of the war, it is not fair,”
– said Iryna Mudra, deputy head of the Presidential Office of Ukraine.
Promises versus reality
For a long time, European leaders have been publicly declaring their support for Ukraine and the need to use Russian assets to rebuild the devastated country. In total, about $300 billion of Russian funds have been frozen in Europe, most of which belong to the central bank of the Russian Federation.
However, the first practical steps have shown other priorities: these funds are not received by Ukraine, but by Western companies that have taken risks by operating in an authoritarian country.
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A dangerous precedent
Ukrainian officials warn that this practice sets a dangerous precedent and undermines Europe’s position in confronting Russia. Kira Rudyk, a Ukrainian parliamentarian, asked a direct question:
“Why are these companies asking their societies to compensate for the risk they have taken?”
Experts also criticize this decision. Jacob Kirkegaard of the Peterson Institute, a US think tank, called it “stunning,” noting that the priority should be to protect Ukraine, not to compensate corporate interests.
Geopolitical implications
The decision to pay investors comes at a critical time when the Donald Trump administration is distancing itself from European policy toward Ukraine. This could weaken the unity of the Western alliance and give Putin additional bargaining power.
Mudra emphasizes that if these funds return to Russia, they will be transformed into “tanks, missiles, drones, and training for new military.” Therefore, control over the assets is of strategic importance for the security of not only Ukraine, but the whole of Europe.
The EU summit in June should decide on the fate of the continuation of sanctions, including the freezing of Russian assets. So far, Europe has been sending conflicting signals about its priorities in this regard.
Russian money abroad
About 260 billion euros of the Central Bank of Russia’s assets have been frozen in the form of securities and cash in the jurisdictions of the G7 member states, the EU and Australia, with more than two-thirds of them frozen in the EU. belgium controls €190 billion of assets in euros, the United States controls assets worth between $40 and $60 billion, and the United Kingdom controls about £25 billion.
Previously, the income from these assets was used to cover loans to Ukraine, but the funds themselves remained untouched. Now, it appears that Ukraine is not even guaranteed interest.
As for the funds of private individuals, the American think tank Atlantic Council claimed at the beginning of the full-scale war that Russians had about $1 trillion of “dark money” abroad. According to a 2020 report, a quarter of this amount is controlled by Putin and his oligarchs. This money is generally off-limits to Ukraine’s Western partners.
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