EU releases €1.5B frozen assets to Ukraine: Switzerland opts out

Swiss Federal President Viola Amherd, 2nd right, with Beat Jans, Federal Councillor and minister of Justice and Police, right, and Volodymyr Zelenskyy, President of Ukraine, 2nd left, with Andriy Yermak, head of the Ukrainian President's Office, left, and their respective delegations, hold bilateral talks, on Monday, January 15, 2024 in Kehrsatz near Bern, Switzerland. © Keystone / Alessandro Della Valle

On Friday, the European Union (EU) announced the release of €1.5 billion (CHF1.44 billion) in aid to Ukraine. This marks the first instalment from the profits generated by Russian assets frozen in response to the war that began in 2022. Switzerland will not follow the EU's approach.

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Approximately €200 billion worth of Russian assets were frozen in the EU following the Russian invasion of Ukraine in February 2022, with around 90% held in Belgium, home to the international fund depository Euroclear.

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In May, the EU-27 agreed to utilise the interest generated by these frozen Russian central bank assets. The interest is expected to yield between €2.5 and €3 billion annually, which will be used to support Ukraine’s defence and post-war reconstruction.

Support for arms and reconstruction

“The EU stands by Ukraine. Today, we are transferring €1.5 billion from frozen Russian assets to Ukraine’s defence and reconstruction,” said European Commission President Ursula von der Leyen in a press release. She added, “There is no better symbol or use for the Kremlin’s money than to make Ukraine and the whole of Europe a safer place to live.”

Ninety percent of the interest generated by these frozen funds (which remain frozen) will be allocated to the European Peace Facility (EPF), an EU mechanism for managing interventions in conflicts, including supplying arms. The remaining 10% will go to the EU’s separate “Facility” for Ukraine, established to support the country’s reconstruction needs.

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Moscow’s response

Ukrainian Prime Minister Denys Shmyhal expressed gratitude for the EU’s support, thanking von der Leyen and the EU for their significant contribution to Ukraine’s defence and reconstruction. The Ukrainian Ministry of Defence also appreciated the EU’s assistance, noting that the funds would strengthen Ukraine’s defence capabilities.

In contrast, Russia condemned the decision as “illegal.” Dmitry Peskov, spokesperson for Russian President Vladimir Putin, stated that such actions would prompt a thoughtful response from Russia.

Switzerland’s stance

When questioned by Keystone-ATS, the State Secretariat for Economic Affairs (Seco) confirmed that Switzerland would not follow the EU’s approach. In line with Swiss law and international obligations, Switzerland stated it could not generate “any extraordinary income in connection with the funds of the Russian central bank.” Seco clarified that this position pertains specifically to Switzerland.

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As of April 2024, the total value of assets from the Central Bank of the Russian Federation frozen in Switzerland was just over CHF7 billion. These funds are separate from those frozen assets owned by individuals or companies linked to Russia.

Adapted from German by DeepL/amva

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