The European Commission set out preliminary plans on Wednesday to use profits from Russian Central Bank assets, frozen in the European Union due to sanctions, to fund weapons for Ukraine and support the Ukrainian arms industry.
Altogether €210 billion ($227 billion) in Russian Central Bank assets are frozen in the EU. The commission estimates the profits at between €2.5 billion and €3 billion for 2024.
Of these profits, 97% should be used to support Ukraine, according to EU officials, with the remaining 3% to be used by financial institutions holding the assets for administrative costs.
Top EU diplomat Josep Borrell said that of the profits going to Ukraine, the majority - 90% of them - should go to the European Peace Facility (EPF), an off-budget fund used for military equipment.
The remaining 10% of profits for Ukraine should go to the EU budget to be used to help strengthen the Ukrainian defence industry. EU member states must now scrutinize the plans, with first talks possible in Brussels on Thursday at a summit of EU leaders.
EU member states have already agreed in principle that revenues from frozen Russian assets - though not the assets themselves - can be used to support Ukraine in some form or another.
Earlier the commission issued the first €4.5-billion ($4.9 billion) payment in financial aid for Ukraine from a €50-billion support fund.
Facing a full-scale Russian invasion for over two years, the payments are "crucial to help Ukraine maintain the functioning of the state," commission president Ursula von der Leyen said in a statement.
The financial support is intended to bolster the warn-torn country's public finances, including paying pensions and salaries and providing basic public services.
The EU executive arm announced the first payment as Ukrainian Prime Minister Denys Shmyhal visited Brussels to deliver a plan to lay the basis for regular future payments from the EU fund.
Shmyhal thanked the EU for the financial support his country received since Russia launched the war. "Ukraine will always remember and appreciate this," he said.
The €50-billion fund for Ukraine to be provided over four years from the EU budget faced fierce opposition from Hungarian Prime Minister Viktor Orbán, who blocked the first attempt to launch the fund.
Orbán criticized the lack of review options. The Hungarian leader also hit out that in his view, EU budget funds earmarked for his country had also been withheld over corruption and abuse of power allegations.
To secure his support, EU leaders agreed to debate the management of the fund for Ukraine once a year.