Germany and France Object to Bond Issuance Using Russian Asset Profits

BRUSSELS (Brussels Morning) –  Germany and France reject proposal of releasing bonds to enhance the intended use of profits generated from frozen Russian assets to support Ukraine. 

European Union leaders on Thursday decided to work on a proposal that would enable them to utilize the revenues from frozen Russian assets to help Ukraine. On Friday, officials said Germany and France opposed this idea. 

The decision to use the profit of blocked assets highlights growing concern over the war, as Kyiv’s outgunned soldiers struggle to hold back Russian troops and US support stalls.  

The leaders consented to collaborate on a proposal that would see majority of the proceeds to an EU-run to buy ammunition. This idea is different from issuing bonds which are being promoted by EU member Belgium and the US. 

I believe that what we will do is to use it (the money) directly and not to develop new vehicles now. In any case, this has not played a role in the debates here, German Chancellor Olaf Scholz stated at the ending ceremony of two-day EU summit. 

Belgian PM Remarks

Belgian Prime Minister Alexander De Croo encouraged the proposal of maximizing profits of the frozen assets at the opening speech at the summit. 

Further, he added “You could also use them to go to the capital markets and use that as a yearly interest payment and then you could leverage it and leverage it and have a much bigger volume”. 

He also said “I understand that today it is maybe too early to do that”. 

EU Diplomats Statement’s 

Many officials and EU diplomats have confirmed that France is one of the countries who opposed this idea. 

“It’s a Belgian test balloon … The Belgians have floated it before, but it hasn’t gotten much traction thus far”, one diplomat said. 

U.S Congress

European officials have confirmed that Washington was also thinking the same idea. “It’s not something we’re keen on,” one diplomat stated. 

“Americans are pushing this, but it’s totally because of Congress,” the official said, indicating a $60 billion military support package for Kyiv stuck in the U.S. Congress.

According to the current EU proposal, profits from frozen assets such as interest payments will be transferred to the European Peace Facility, an off-budget money that provides support to non-EU nations such as Ukraine. 

A statement issued by European Commission President Ursula von der Leyen on Thursday, revealed that the EU would be able to use first billion euros of profits on Russian assets for Ukraine in the month of July. 

Belgium keeps bonds as a backup option, will decide after seeing how EU plans go. 

Dee Croo said, “This is something that we as Belgians had designed and that will remain on the table”.