Russian money for Ukraine: what’s wrong with the help of the West

Ukraine’s Western partners are preparing a multi-billion dollar package of financial assistance for our country. Not all issues related to this package have been resolved, but an agreement in principle has already been reached between the United States and Germany on it. Should we be happy about this? Apostrophe journalist Viktor Avdeenko explains.

Ukraine enthusiastically received the news that Germany had agreed in principle to the US proposal to use Russian assets frozen in the West in the interests of our country.

This news from Bloomberg could have become a sensation, since the United States’ proposal to its European partners was to transfer to us all the frozen assets of the aggressor country. And, of course, the consent of such a heavyweight as Germany, which is famous for its super-caution, especially when it comes to relations with the Russian Federation, would be a clear signal to other EU members.

However, alas, there was no sensation. So far, the United States and Germany have agreed that not the frozen Russian assets themselves will be transferred to Ukraine, but only the income from them.

That is, it turns out that Germany again elegantly moved away from the topic, while agreeing to some compromise.

In principle, Germans and, in general, Europeans can be understood. After all, in the United States, the sovereign assets of the Russian Federation are somewhere around 6-7 billion dollars, while in Europe – more than 200 billion. And the EU seriously - and, we note, quite rightly - fears that Russia may resort to mirror measures in relation to European assets on its territory. And, since Russia is definitely a country of distorting mirrors, such measures can turn out to be extremely painful. In addition, Europeans are afraid of lawsuits from the Russian Federation in their own courts, which, as is known, guard sovereign property. You never know what verdicts they will ultimately make—democracy, after all. And, finally, Europe would really not like billions of dictators and corrupt officials of all stripes to start flowing out of the accounts in its banks, which are rightfully considered the most reliable in the world, since the confiscation of money from Putin’s Russia would become a certain precedent.

So, Germany agreed to the US proposal to use income from the frozen assets of the Russian Federation to help our country. The European Union, including, of course, Germany, has already agreed on the allocation to us of funds received in the form of income from Russian sovereign income. The final decision on this issue was taken by the EU Council on May 21. Our country is expected to receive about 3 billion euros this year. Money should start arriving in July. It is reported that in 2024, income from Russian assets received after February 15 will be transferred to us - obviously, this is due to the fact that it was then, in mid-February, that the EU approved the legal basis for the use of income from these assets. Anything received before February 15 will remain in the European depository Euroclear for possible use in legal proceedings if Russia decides to pursue legal action.

What then, exactly, is the news, which, let us remember, had every chance of becoming a sensation? Germany agreed to what it had already done? This doesn't make any sense. Therefore, the issue is apparently something else. And here several considerations come to mind.

The first of them is not the most pleasant, and it consists in the fact that the European Union (read Germany) has not yet fully decided to confiscate income from the assets of the Russian Federation in order to transfer them to Ukraine. And therefore, the support and political will of the United States was needed to bring this decision to life.

By the way, one very interesting detail has emerged - it turns out that income from Russian assets in the EU will not be withdrawn, but will be taxed at a rate of 100%. If anyone thinks that such taxes do not exist, then he is very mistaken - in the USA in the 1950-1960s the maximum tax rate reached 94%, and in Great Britain during the war (and we are now at war) excess income was taxed at rate 99.25%.

Thus, formally we are not even talking about confiscation of income, let alone the assets themselves. As they say, “appreciate the beauty of the game.” And from a legal point of view it is ideal. Although cautious Europeans still made a nest egg for potential legal costs.

Therefore, it is highly doubtful that the Europeans have been leading us by the nose all this time, guided by the principle: “to promise does not mean to marry.” Moreover, the European Union is extremely scrupulous about official wording, and if the document says that the money will be transferred, then this has already been definitely decided.

But what the Europeans could well have done was to relieve themselves of the excessive burden of responsibility. And transfer it to the traditional senior partner - the USA. Moreover, the senior partner himself offered his help. For the United States, by the way, this arrangement is also beneficial - it will help neutralize the sediment that has formed during the time that Washington considered and for a long time could not approve $61 billion in aid to Ukraine. Now the United States will once again take up the banner of our country’s main partner, capable of attracting more timid allies with it.

And, of course, the American initiative will raise the status of the agreement on assistance allocated to us from purely European to global. It is expected to be discussed by G-7 finance ministers at their meeting in the Italian city of Stresa, which begins on May 23. And the final decision should be made at the meeting of the G7 leaders on June 13-15 - exactly on the eve of the Global Peace Summit. Thus, the middle of next month should be the culmination of international political and economic solidarity with our country.

What can we count on then? It is expected that, starting from 2025, the income transferred to us from Russian assets will amount to about 5 billion euros annually. And, most importantly, these funds should be part of the $50 billion bailout package that the United States is also lobbying for. It is planned to develop a mechanism for providing this assistance so that it does not depend on political alignments in Washington - a subtle hint at the possible return of Donald Trump to the White House.

So far, however, there are no specifics on this aid package - perhaps it will appear in June. For us, it is important that the allocated assistance from our partners, for which we are, of course, very grateful to them, does not get bogged down in a bureaucratic swamp, as, alas, has happened more than once.