According to an internal document from the European External Action Service (EEAS) consulted by Euractiv, nearly 2 billion euros of profits from Russian assets frozen in the European Union (EU) will be devoted to military purchases for the Ukraine, of which one billion will be allocated to purchases made directly from the Ukrainian defense industry.
So far, the EU has tied up around €210 billion in assets of the Central Bank of Russia. The majority of this sum is held by the Euroclear clearing house, based in Brussels.
Countries like Poland and the Baltics have pushed to seize the entire amount, but due to legal reservations surrounding the legality of such a measure, the EU has only seized the profits generated by these assets since they were frozen. .
Up to 90% of the profits seized in 2024, or 3.3 billion euros, have been or will be allocated to the purchase of weapons for kyiv, in particular those made directly from the country’s industry. The remaining 10% has been or will be used for the reconstruction of Ukraine.
After a first disbursement, through the European Peace Facility (EFF), of the profits generated by Russian assets frozen between February 15, 2024 and the end of the first half of 2024 (around 1.4 billion euros) in August, a second disbursement of profits generated in the second half of 2024 will take place in April 2025 and will represent 1.9 billion euros, according to the internal document consulted by EURACTIV.
As a reminder, the EPF is one of the two instruments through which the EU channels the profits from frozen Russian assets to support Ukraine, the other being the Ukraine Facility, which is more focused on reconstruction and reforms.
Change in financing strategy
Member states decided that the next installments of seized profits would see the ratio given to armaments and reconstruction reversed, as only 10% should be spent on arms purchases in the future. This change in strategy will deprive European countries of an important source of financing for their defense purchases.
At the same time, payments under the EFF, the EU fund intended to reimburse member states for their aid to Ukraine, are blocked by Budapest, increasing the need for Brussels to find new solutions. funding for Ukrainian defense aid.
Purchases made in support of kyiv are classified into three lines of action: munitions, air defense systems and purchases from Ukrainian industry.
One billion euros should be used to help Ukraine buy weapons directly from its national industry, recommends the document drawn up by the EEAS.
Ukraine’s defense industry, while echoing Ukrainian President Volodymyr Zelensky’s calls for financial support, has been pushing to be allowed to export to support its production. The financial gap between the production capacity of Ukrainian industry and current orders currently amounts to more than 13 billion euros, which justifies the purchase of Ukrainian products by Europe.
“Domestic production often provides a more stable, affordable, reliable and easily adaptable source of advanced military equipment (especially drones and missiles)”emphasizes the EU diplomatic service in the internal document, adding that this would also help Ukraine maintain its “skilled workers”.
Regarding the second line of action, the EEAS plan foresees devoting around 450 million euros to the purchase or acquisition and delivery of NATO standard and Soviet caliber munitions, that is, artillery, mortars and grenade launchers, as well as rockets and GRAD bombs, the text states.
The same amount should be spent on the purchase or acquisition and delivery of air defense guns, missiles and ammunition for “critical” systems operating in Ukraine — for example, the German IRIS-T missiles or Franco-Italian ASTER, the American short-range air defense systems SHORAD, or the light anti-aircraft weapons MANPADS.
The importance of timing
Given the situation on the battlefield, where Ukraine is struggling to regain territories occupied by Russia, it is essential that the actions of kyiv’s allies have an immediate impact.
“Ukrainian Defense Minister told EU foreign ministers that Ukraine needs more munitions, stronger air defense and increased support for its own defense industry”explained the High Representative of the Union for Foreign Affairs and Security Policy, Kaja Kallas, after a Council meeting on Monday 16 December.
Therefore, “the main criterion for selecting the implementing actors would be their ability to deliver the requested military equipment as soon as possible and no later than the end of October 2025”we can read in the document.
This means that the military equipment will arrive on the ground around six months after the money was transferred in April through the FEP and would not be subject to a Hungarian veto in this context.
The list of equipment to be provided should, however, be adapted according to Ukraine’s needs and the availability of weapons.
For example, for the first tranche, the final distribution by line of action had been modified “in line with Ukrainian demand for rapidly available and critically important military equipment”the document says, increasing the allocation of funds to the Ukrainian defense industry directly from 25 to 28.4%.
Although the European preference is enshrined in the text of the FEP, the equipment could be purchased from any country under the plan provided by the EEAS.
