EU gives $1.6 billion in profits from frozen Russian assets to Ukraine

July 26 (UPI) -- The European Union Friday transferred $1.6 billion in frozen Russian assets held by central securities depositories to Ukraine for military and reconstruction support against Russia's invasion.

Russian Central Bank assets were frozen by EU sanctions in the wake of Russia's February 2022 invasion of Ukraine. The money given to Ukraine Friday was made available to the European Commission Wednesday.

"The EU stands with Ukraine," European Commission President Ursula von der Leyen said in a statement. "Today we transfer $1.6 billion in proceeds from immobilized Russian assets to the defense and reconstruction of Ukraine. There is no better symbol or use for the Kremlin's money than to make Ukraine and all of Europe a safer place to live."

After Russia attacked Ukraine, the EU adopted several sanction packages. The sanctions banned transactions related to the assets and reserves of the Central Bank of Russia.

" The extraordinary revenues generated in this context by the EU operators do not belong to Russia and are held by CSDs. The EU has now started to channel these revenues to Ukraine," the commission said in a statement.

When the central bank's transactions were prohibited in Europe, according to the EU, it led to an "extraordinary and unusual accumulation of cash and deposits on the balance sheets of CSDs from maturing financial instruments and generates extraordinary revenue."

It's that revenue that's being transferred to Ukraine with the first installment announced Friday.

"Following proposals by the Commission and the High Representative, in February 2024, the Council decided that central securities depositories holding more than $1.08 million worth of assets and reserves of the Central Bank of Russia that were immobilized as a result of EU sanctions must set aside extraordinary cash balances accumulating due to EU sanctions and may not dispose of the ensuing net revenues generated by the EU operators," the commission said.

EU High Representative Josep Borrell said in a statement profits from the frozen Russian assets are being used for Ukraine's defense industry.

"The first tranche of the windfall profits will provide concrete support on the ground," he said. "We are not only providing military support to Ukraine but also made in Ukraine, contributing to Ukraine's resilience in combating Russia's war of aggression."

Von der Leyen told the European Parliament in February 2024 that the EU should consider using frozen asset profits to help Ukraine defend itself from Russian aggression.

Roughly $324 billion in Russian central bank assets were frozen by EU and G7 nations, including the United States, after Russia invaded Ukraine.

Profits from those frozen assets are now being harnessed for Ukraine.