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U.S.-EU plan would give Ukraine acrued interest from frozen Russian assets

STEVE INSKEEP, HOST:

Leaders of European Union member countries have agreed on a plan to make Russian investments pay Ukraine. At the start of Russia's invasion of Ukraine, European governments froze Russian assets within their borders - bank accounts, bonds, other investments. Now Europeans are expected to take the interest income from those investments, although they were reluctant to act. NPR international affairs correspondent Jackie Northam is here. Hi, Jackie.

JACKIE NORTHAM, BYLINE: Morning, Steve.

INSKEEP: What are the details?

NORTHAM: Well, the agreement still needs a final green light. It's expected to be a formality at this point, though. But it would allow the European Union, as you said, to take the interest, the profits that have been generated on about $300 billion worth of Russian central bank assets and, you know, bonds, cash and the like. And they were frozen by the EU and the U.S. and others after Russia invaded Ukraine just over two years ago. The Kremlin can't touch them. And so the money's just been sitting in financial institutions, mostly in Europe, gaining interest while the EU and the U.S. try to figure out what to do with them.

And the U.S. wants to take all of it for a use for Ukraine. But the EU thinks that's too risky, you know? Instead, after many, many months of discussion, it decided that the interest from that $300 billion worth of assets could be used to buy weapons for Ukraine. And the rest of it, Steve. Will just continue to sit in banks.

INSKEEP: Why not just take the Russians' $300 billion?

NORTHAM: Well, there are real concerns in Europe about the legality of just taking these frozen assets because it may conflict with European law. But the EU lawyers decided that the interest could be taken because they felt it doesn't belong to Russia. You know, there's also concerns that taking this 300 billion could set a precedent for, you know, future conflicts, let's say, between China and Taiwan. There's a fear that just seizing the funds could undermine the trust in the euro, the European currency, and in Europe itself as an investment location.

And, you know, also, Steve, there are fears of retaliation. The Kremlin could take European assets sitting in Russia. And these are huge sums of money. And if that happened, all this money moving around, it could potentially trigger, you know, a global financial crisis.

INSKEEP: First, I'm amazed that European assets would still be sitting in Russia at this point. But setting that aside, I'm curious why the Europeans finally decided to act now. It does seem to be a moment when Ukraine is a little more desperate for money because aid is held up in the U.S. Congress.

NORTHAM: Yeah. That's exactly right. You know, and the EU is fully aware that U.S. interest in Ukraine is weakening and that they may have to go it alone in helping Ukraine fight this war. As I said, the Biden administration has wanted the full 300 billion to be used for Ukraine all along. And now that U.S. support for Ukraine is uncertain and funding is stalled, the Biden administration has been increasing pressure on the EU to unfreeze all of those funds, but that just hasn't happened.

INSKEEP: OK. So the interest, at least, is going to Ukraine. How much does that help?

NORTHAM: Well, this could generate upwards of about $16 billion from now until 2027. It's not pocket change, but not nearly enough to help Ukraine get weapons at a time when it's outgunned on the battlefield. And it could be used to rebuild. The World Bank says it could cost upwards of $400 billion to reconstruct Ukraine. And, Steve, the first part - if it all goes through, the first part of these funds could be released as early as July.

INSKEEP: NPR international affairs correspondent Jackie Northam with a story of great interest. Thanks so much.

NORTHAM: Thanks, Steve. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
Jackie Northam
Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.