Will Moscow pay for Kiev's weapons? The use of frozen Russian assets has been discussed for months. Divisions and open tables in Brussels and Washington pushing. Yesterday a first European “agreement”, which sounds like cohesion among the countries of the Old Continent and which could be a boost for the G7 in June in Puglia, when Biden will arrive in Italy expecting a decision, a “save Ukraine plan”, financed largely part with Russian money. But Moscow has already raised its head and there are many concerned European countries and European institutions (such as the ECB) that are raising legal doubts and economic fears. It is a geopolitical and financial risk and the landlady in Borgo Egnazia in just over a month will be Prime Minister Giorgia Meloni.
Where are we at? Yesterday the ambassadors of the 27 member states of the Union reached an agreement in principle to use around 3 billion euros a year for Ukraine, interest accrued on around 200 billion in Russian assets frozen in Europe. The use will be 90% for military assistance (European Peace Facility, the intergovernmental instrument used for the purchase of weapons) and 10% for the reconstruction of the country at war. Translated: “Russia will pay directly for its crimes,” commented European Commission Vice President Valdis Dombrovskis. It is the first decision, after months of discussions. Europe is divided by concerns about possible negative effects on the euro and on European companies, by legal fears (Moscow has always threatened decades-long legal action), by internal divisions and by the position of neutral countries (Austria, Ireland, Malta and Cyprus ). Yesterday, however, the agreement and the first decision to proceed, with a common and softer line compared to the American one which would like to use the 300 billion euros of Russian assets tied up in the hands of the G7 (217 in Europe). Now the European agreement will have to be formalized by the Union ministers. There is no written date, but the first tranche of aid should arrive in Kiev in July.
But political, legal and economic questions remain on the table and Italy has its role in this risk. Most of Russia's assets are in Belgium. The sanctions are based on international rules and from a legal point of view that capital cannot be touched. Hence the concern of some member states and the ECB: violating international law also means undermining confidence in the euro and in European markets. France and Germany first of all do not hide the fear of finding themselves faced with the flight of investors. Just think that Saudi Arabia and Indonesia have already said they are worried about their money in Europe. The risk of setting a precedent is capital flight. Furthermore, in recent weeks Moscow has shown how it wants and can react. Just think about the transfer temporary of the Russian subsidiaries of Ariston and Bosch to Gazprom Domestic Systems. And given that the majority of Russian assets are in Europe, it is clear that it is the EU countries that are most worried and that the United States, Canada and Japan are pushing harder.
And so we come to the G7 in Puglia in June. The world's leaders will meet and President Biden clearly told Prime Minister Meloni, during the meeting at the White House in March, that he had “strong expectations” about the summit in Puglia. The American president, therefore, will measure the reliability of the hostess who in recent months has worked to soften the opposition and reach an agreement on the use for Ukraine of Russian funds frozen in Europe. Biden presses, but European countries have the most to lose. What will come out of Borgo Egnazia? Will yesterday's agreement (once given the green light by the European Council) be enough or will it pave the way for an agreement more in line with the United States?
