The EU could use billions in profits from frozen Russian assets to arm Ukraine. Kyiv needs them to act fast

Ukraine is pinning its hopes on a proposal being put in front of EU leaders to help Kyiv fight off Vladimir Putin’s invasion – to fund arms and ammunition for Ukraine using billions of pounds worth of profits from frozen Russian assets.

The ability of Kyiv’s troops to defend against Russian attacks along the 600-mile frontline has been dealt a blow in recent months by the inability of the US Congress to agree to tens of billions of dollars in military funding for Ukraine, it is an ongoing stalemate. Critically, on the frontlines, there has been a dangerous shortfall in supplies of artillery shells. Artillery has been key to Ukraine’s defence of existing positions and to any potential advance.

“Kremen” is the nom-de-guerre of a Lt Colonel commanding the 74th battalion of the 104th Brigade which has, for 16 months, manned a stretch of the frontline in Ukraine’s southeast, inside the Zaporizhzhia region. It is an area Moscow is very keen to control.

Since the fall, in February, of the symbolically important town of Avdiivka to the northeast of his battalion’s position near the town of Huliaipole, Kremen says there has been a sharp intensification of attacks against his positions. He is sure that the Russians have redeployed many of their soldiers, tanks and artillery from around Avdiivka to launch fierce assaults. Wave after wave has left the ground in front of the Ukrainian trenches, swept by bitterly cold wind and occasional snowfalls, littered with Russian corpses.

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Kremen says: “We are feeling the lack of US-supplied ammunition very hard. The shortages [of] ammunition has made Ukrainian forces dangerously vulnerable. Without sufficient ammunition supplies for Ukrainian artillery to suppress the frontal, mass Russian infantry assaults, and provide cover for our own men in any counter-thrusts, we are in a much more vulnerable position.”

He adds: “The lack of artillery ammunition was definitely a big factor in the fall of Avdiivka. It is imperative to get more ammunition for our artillery from the US and any of our other allies.”

It is this need for urgency that Kremen wants to impress upon Ukraine’s allies, his battalion suffering many casualties. The EU itself has had its own issues with funding, with Hungary’s leader Viktor Orban – Putin’s closest ally in the EU – having previously held up fresh aid.

The proposal from the European Commission aims to head any problems off at the pass. The 27-nation EU is holding around €210bn (£180bn) in Russian central bank assets, most of it frozen in Belgium, in retaliation for Moscow’s war against Ukraine. The bloc estimates that the money could generate profits of up to €3bn (up to £2.5bn) each year. As nations like Hungary and Slovakia refuse to supply weapons to Ukraine, these windfall profits would be split up. Around 90 per cent of the money would be put into a special fund that many EU countries already use to get reimbursed for arms and ammunition they send.

The other 10 per cent would be put into the EU budget to help bolster Ukraine’s defence industry. This distinction then allows EU members that object to sending weapons to claim that they are not arming Ukraine directly as not all the money is being used to do so.

Leaders will also discuss controversial proposals by some members to fund improvements to EU members’ defence capabilities by offering international bonds. Although French president, Emmanuel Macron, and Estonian prime minister Kaja Kallas have previously floated the idea – suggesting bonds worth €100m.

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“The damage that Russia is causing to Ukraine is much bigger than the value of those assets that we have in Europe. We have to think how we can really achieve this [so] that our taxpayers don’t have to pay the damage that Russia is causing in Ukraine,” Kallas said at the Brussels summit. “The crisis is right now, here ... We don’t have the time to wait.”

However, other members, such as Germany, have criticised the idea of selling debt to fund defence needs. But the German chancellor, Olaf Scholz, said on Thursday that he is behind the plan to use the profits from frozen Russian assets to help Ukraine and that should be used “first and foremost” to buy weapons and ammunition. “What is important to me is that we give this use a clear direction now, the direction of acquiring ammunition, for example,” he said.

Asked what signal would be sent to Putin if there is no agreement on using windfall profits, Scholz said: “I am very sure that we are sending a very clear signal to Putin here. He has miscalculated if he thinks we are not in a position to support Ukraine for as long as is necessary, and the use of the windfall profits is a small but important element.”

Ukraine has managed to resist Russian onslaughts and push them back because of the provision of American and other Western 155mm artillery and missile systems that are much more sophisticated and accurate, with longer range, than the Kremlin’s equivalents.

However, the lion’s share of the ammunition has been provided by the US. But for months, Republican politicians loyal to the Putin-admiring former president, Donald Trump, have sought to block the transfer of military aid over domestic political spats. A Czech-led initiative is also seeking to purchase 800,000 Soviet and Western-calibre artillery shells from sources around the world. Although both Hungary and Slovakia have said they will not participate.

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What all this has meant is that Ukrainian troops have had to reduce their rate of artillery fire, even in the face of massive Russian barrages. Ukrainian soldiers in frontline areas have said that some artillery pieces are mostly silent, with just two shells left. One infantryman in the defences around the eastern city of Kupiansk, under intense attack from Putin’s forces for months, told The Independent earlier this month that he and his comrades are facing 22 Russian shells for every one that his own side can fire.

Nato’s secretary-general, Jens Stoltenberg, warned on Thursday that “the situation on the battlefield remains very difficult. Ukraine is running out of ammunition. So, Ukraine needs even more support, and they need it now.”

The discussions during the Brussels summit reflect how Russia’s war on Ukraine has become intertwined with the EU’s own security concerns. Ahead of the summit, EU Council president Charles Michel said that Europeans “face a pivotal moment”. He said that with Europe “facing the biggest security threat since the Second World War, it is high time we take radical and concrete steps to be defence-ready and put the EU’s economy on a ‘war footing.’”

Ukrainian president Volodymyr Zelensky knows what a war footing means all too well, and he was clear to the EU’s leaders via video-link during the summit on Thursday. Zelensky said it was “humiliating for Europe” that Ukraine did not have enough artillery in its fight against Russia. He urged the EU to use not only the profits of the frozen assets but also the assets themselves.

“Russia must feel the real cost of war and the need for a just peace,” Zelensky said.