EU to use windfall profits from Russian assets for Ukraine. Will allies follow?

European Union countries formally adopted a plan on Tuesday to use windfall profits from Russian central bank assets frozen in the EU for Ukraine's defense.

European Union countries formally adopted a plan on Tuesday to use windfall profits from Russian central bank assets frozen in the EU for Ukraine’s defense.

It is the first in what could be a series of moves by the G7 group of large Western nations to utilize the near $300 billion worth of Moscow’s assets that have been immobilized, but it remains a highly complex and controversial precedent.

Here is what has been done and some of the other ideas being looked at:

Tuesday’s EU move exploits the fact that the lion’s share of the Russian reserves – essentially bonds and other types of securities in which the Russian central bank had invested – are held in a Brussels-based depository called Euroclear.

Under the agreement, 90% of the proceeds that the bonds generate will go into an EU-run fund for military aid for Ukraine, with the other 10% going to support Kyiv in other ways.

The EU expects the assets to yield about 15-20 billion euros ($16.30-$21.70 billion) in so-called windfall profits, due to exceptional interest, by 2027.

Ukraine is expected to receive the first tranche of around 3.5 billion euros in July. This will be on top of a 50 billion euro support program that the EU set up on Feb. 1.

Some are still wary, though, including the European Central Bank, which has said that any seizure of the Russian assets should only be done in concert with other G7 powers.