The European Union has announced its intention to send over the first tranche of interest earned by frozen Russian funds to Kiev next month, and Russia has vowed to respond to what it maintains is theft.
The European Commission’s Josep Borrell announced on Monday that the $1.5 billion in interest will be sent to Ukraine during the first week of August to help the country cover its arms purchases.
A spokesman for the Kremlin, Dmitry Peskov, said that there will be retaliation against the West for expropriating the assets, with legal proceedings in the works against the entities that they believe stole roughly $282 billion worth of Russian assets. The money in question is still frozen.
“Such acts of thievery cannot remain without a response. This money is not only stolen, but also spent to buy weapons. It’s hard to imagine anything worse,” he stated.
Calling it a violation of both international law and property rights, he said that legal remedies would be used to fight back.
Not long after fighting broke out between Ukraine and Russia, the West froze around $300 billion worth of Russian central bank assets, most of which are now in the EU depositary Euroclear. The assets are largely made up of bonds and other types of securities Russia’s central bank invested in. The EU believes the assets could yield as much as $22 billion in profits by 2027.
The EU approved a plan in May that will see the interest these frozen assets earn being sent to Ukraine to help its defense and recovery. While 90% of the proceeds will be devoted to military aid for Ukraine, 10% must be used for other types of support to appease some EU members who were unwilling to provide Kiev with military support.
Similarly, the Group of Seven nations reached an agreement last month to use the interest earned on frozen assets belonging to Russia for a $50 million loan to Ukraine.
Treasury Secretary fights back against theft claims
Although Russia has repeatedly referred to these moves as “theft,” U.S. Treasury Secretary Janet Yellen insists they are not stealing money from Moscow.
Comments by Putin that were translated from Russian by Reuters doubled down on the theft claim. He said: “Despite all the chicanery, theft will certainly remain theft. And it will not go unpunished. Now it is becoming obvious to all countries, companies [and] sovereign funds that their assets and reserves are far from safe in both the legal and economic sense of the word. … Anyone could be next in line for expropriation by the U.S. and the West."
Yellen pushed back, insisting there is no basis for the theft claim. On ABC News’ This Week, she noted that "[the assets have] been impounded, the investments that Russia had have matured, so Russia's funds are sitting in cash. But they're generating income for the institution, which Russia has no claim on."
Russia has already been leveraging the situation to convince more countries to join the BRICS economic bloc of nations and move away from the U.S. dollar to soften the blow of Western sanctions and chip away at the dollar's dominance on the global stage.
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