ILI expert Bohdan Karnaukh spoke on Hromadske Radio about frozen Russian assets
95% of the €1.4 billion received by the European Union from frozen Russian assets will be directed to Ukraine through the Ukraine Loan Cooperation Mechanism. This was stated by Bohdan Karnaukh, an expert at the Institute of Legislative Ideas, on Hromadske Radio.
“This is a mechanism under which Ukraine receives loans that are repaid using proceeds generated from frozen assets. The agreed loan volume for 2026-2027 amounts to approximately €90 billion. The remaining 5% will be allocated through the European Peace Facility to support Ukraine’s defense needs,” the expert explained.
According to him, annual revenues from frozen assets amount to billions of euros: €4.4 billion in 2023, €6.9 billion in 2024, and around €5 billion in 2025. This is because the assets are invested in financial instruments and continue generating income.
“At present, the EU is not ready to touch the principal amount of frozen assets. Instead, it uses and transfers to Ukraine the interest they generate. Russian frozen funds invested in securities, bonds, and bills continue to generate income even while frozen. The European securities depository Euroclear considers that these reinvestment proceeds do not belong to Russia, allowing the EU to use them,” noted Bohdan Karnaukh.
He emphasized that the issue of confiscating frozen Russian assets has remained one of the most debated topics in Europe since the beginning of Russia’s full-scale invasion of Ukraine. Despite political support for Kyiv, EU countries face a number of legal, economic, and political risks that hinder a final decision.
“One of the key obstacles is the principle of jurisdictional immunity, according to which sovereign state property cannot be confiscated by another state. In Europe, there are concerns that confiscating Russian assets could set a dangerous precedent in international law,” the ILI expert explained.
In his view, economic risks are also significant, particularly regarding potential impacts on trust in the euro and the US dollar as reserve currencies.
“The EU fears that countries might start withdrawing their reserves from European and American financial systems, shifting toward alternative mechanisms, including Chinese ones. In addition, there are pro-Russian actors within the EU who block or slow down decisions on asset confiscation,” said Bohdan Karnaukh.
The ILI expert also noted that Belgium plays a special role in this issue, as a significant share of frozen Russian assets is held there – in the Euroclear depository. Overall, out of approximately €300 billion in frozen funds, the majority is concentrated in this system.
“Belgium fears that in the event of confiscation, it would become the primary party in potential lawsuits, which could create financial risks comparable to its GDP. Therefore, Brussels insists on protection guarantees from the EU. At the same time, some European politicians view frozen assets as leverage in future negotiations with Russia and oppose their immediate confiscation,” Bohdan Karnaukh concluded.