European Commission wants to spend €200 billion on rebuilding Ukraine

Brussels is testing the willingness of national governments to transfer the assets to riskier investments that could bring more profits to Ukraine and increase pressure on Russia, which refuses to stop fighting, Politico reports.

Proponents see the scheme as a step toward potentially confiscating the assets and handing them over to Ukraine as punishment for Russia’s refusal to pay post-war reparations.

The option does not include immediate asset confiscation, which most EU countries oppose on financial and legal grounds.

The issue will be discussed for the first time by the 27 EU foreign ministers on Saturday during an informal meeting in Copenhagen, Denmark. According to the preparatory note seen by the publication, the discussion will focus on "further options for using the proceeds from Russia's frozen sovereign assets."

"We hear that it is more difficult to raise funds now. But we have these assets, and the logical question is how we can use them and why we are not doing so," said Kerli Veski, Estonia's Deputy Foreign Minister for Legal and Consular Affairs.

In the European Commission, this idea is being promoted by Economic Commissioner Valdis Dombrovskis and Foreign Policy Chief Kaja Kallas.

The Baltic states and some other EU members have long insisted on confiscating all funds, but most countries, including Germany, Italy and Belgium, are against it. The latter is particularly vulnerable to legal and financial risks, since it is home to the Euroclear financial institution, which holds most of Russia's assets, the publication notes.

As a workaround, Brussels is considering creating a special fund modeled on the European Stability Mechanism (ESM). A potential fund for Ukraine could also be open to G7 countries, including the UK and Canada, which favour asset confiscation, an EU official said. The fund would allow frozen assets to be invested in riskier, higher-yield instruments, providing Ukraine with additional resources.

Sceptics, including Euroclear CEO Valerie Urbain, however, worry that EU taxpayers would have to cover losses if risky transactions fail.

The Belgian government has recently become more receptive to the Commission's plan, according to an EU official and a senior diplomat, while countries further from Russia, such as Spain, also support the idea.

Photo: DSNS.