EU transfers frozen Russian funds to Kyiv amid Moscow's threats

Ukraine on Wednesday received 4 billion euros (about $4.7 billion) in a European Union loan sourced from frozen Russian assets, according to the country's Ministry of Finance.

The Kremlin later warned European leaders that Russia would pursue any individual or country involved in seizing its assets, cautioning that such moves would backfire on European depositories and investments.

"We are talking about plans for the illegal seizure of Russian property. In Russian, we call that simply theft," Kremlin spokesperson Dmitry Peskov told reporters on Wednesday.

Peskov said that if anyone stole or misappropriated Russia's assets – or income from those assets – then "the persons involved will be prosecuted in one way or another, they will all be called to account."

He said any countries involved would also be pursued.

The Kremlin has repeatedly said that attempting to take its assets will undermine confidence in the central banking system, in the euro as a currency, and in the perception of the safety of ownership and property rights in Europe.

The European Commission is developing a new "reparation loan" proposal, which would be secured by those frozen Russian assets. However, agreement from all 27 member countries is required, and not all were on board ahead of Wednesday's EU summit in Copenhagen.

According to the plan, EU countries would lend Ukraine around 140 billion euros based on the immobilized assets of the Russian Central Bank in Euroclear, a Brussels-based central securities depository. Kyiv would only refund the money once it receives compensation from Russia through a peace agreement.

There are some $300 billion in frozen Russian assets, 210 billion euros of which is held in Europe, of which 185 billion euros is in Euroclear; about 176 billion euros of that has become cash as the securities mature.

The Belgian government has repeatedly voiced concern about the scenario of a multi-billion-euro lawsuit and negative repercussions for the economy. European Central Bank President Christine Lagarde has expressed similar worries.

"If countries see that central bank money can disappear when European politicians see fit, they might decide to withdraw their reserves from the eurozone," Belgian Prime Minister Bart De Wever has said.

Lagarde has warned that confiscating state-immune assets could discourage other countries from holding reserves in euros, undermining the bloc's push to establish the euro as a global reserve currency.

European Commission President Ursula von der Leyen Tuesday also announced that the EU will commit 2 billion euros to supply drones to Ukraine.

"This allows Ukraine to scale up and to use its full capacity and of course it will also allow the European Union to benefit from this technology," she added.

According to the European Commission, total EU support for Ukraine is now approaching 178 billion euros since the conflict began in February 2022, making the EU the leading provider of aid to Ukraine.

(With input from agencies)