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For months, Western allies have been debating how far to go in using the Russian central bank assets. The United States believes that it would be legal under international law to confiscate the money and give it to Ukraine, but several European countries, including France and Germany, have been wary about the lawfulness of such a move and the precedent that it would set.
Although the United States recently passed legislation that would give the Biden administration the authority to seize and confiscate Russian assets, the desire to act in unison with Europe has largely sidelined that idea.
This month, European Union nations agreed in principle that they would be willing to use 90 percent of the profits to buy arms for Ukraine through the European Peace Facility, an E.U. structure to finance military aid and its own military missions. The remaining 10 percent would go to reconstruction and nonlethal purchases, to satisfy countries like Ireland, Austria, Cyprus and Malta, which are militarily neutral.
About 190 billion euros of Russian central bank assets are held by Belgium’s central securities depository, Euroclear. The assets are generating about €3 billion a year of interest that could be transferred to Ukraine.
However, using the interest as the basis for a loan could provide Ukraine with a much larger amount of money — potentially as much as $50 billion — up front. The method for delivering the money still needs to be worked out. The World Bank or another international institution could serve as an intermediary.
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