Tensions between Russia and the West have reached a new peak following the EU’s controversial decision, on 26 July 2024, to transfer 1.5 billion euros of frozen Russian assets held in European banks to Ukraine. The amount is the first tranche of profits generated from the approximately 210 billion euros’ worth of Russian assets that the EU froze as part of the sanctions it imposed on Russia at the outset of the war on Ukraine in February 2022. The G7 countries froze another approximately $280 billion of Russian assets at the same time.

 In June, the 27 EU countries agreed to use the interest generated by these assets to back a $50 billion loan to Ukraine to help it fund arms purchases for use against Russia as well as finance anticipated reconstruction works after the end of the war. Euroclear, a Belgian company, holds most of the assets frozen by the EU, about 190 billion euros. They include a wide range of financial properties, bank accounts, real estate, stocks, bonds, luxury assets, and other investments held by Russian entities. The West has long been eyeing those assets and/or their anticipated profits as support purchases for the benefit of Ukraine. 

“Of course, such steps by the EU Commission will not go unanswered,” Kremlin Spokesman Dmitry Peskov said on Friday, adding that the “illegal” actions would receive a “well-thought-out” response, fully consistent with the interests of Russia. The Kremlin has repeatedly warned that it would view attempts to access its assets without its consent as theft and a violation of international law, calling for retaliation. 

The EU’s decision to tap into Russian assets is the latest in a string of Western measures responding to developments on the ground in the war in Ukraine, especially since May when Russia opened a new front in the northern Kharkiv Oblast. Russian forces have penetrated deep into the border region in the vicinity of the strategic city of Kharkiv, Ukraine’s second largest city and a major logistical hub. Russia has also intensified strikes against Ukrainian energy facilities in towns across the country and against crucial rail and road networks. 

More significant Western responses to the situation have included decisions to cross previously declared “red lines” to boost the ability of the Ukrainian Armed Force (UAF) to counter Russia’s military advantages. Foremost among these is the Biden administration’s authorisation of the use of US missile systems by Ukraine to strike targets inside Russia. 

Previously, in early May, London announced that it would allow Kyiv to use British weapons to strike inside Russia. In an informal meeting with NATO ministers in Prague, in May, NATO Secretary-General Jens Stoltenberg confirmed that the UK had given Ukraine permission to use Britain’s “Storm Shadow” cruise missiles in its operations against Russia “without restrictions.” Germany and France followed suit later that month, authorising the use of their missile systems and other advanced military technologies. 

Such moves are at odds with mounting popular opposition in Western societies to prolonging the Ukrainian war. Repercussions from the nearly two-and-a-half-year-old conflict have taken a heavy toll on European economies, in large part due to the sanctions targeting the Russian oil sector which ended up rebounding on the European energy and industrial sectors. While the US economy has not been impacted as severely, unlimited financial and military support for Ukraine and US military interventionism overseas, in general, will be among the hot button issues in the forthcoming presidential elections in November. 

Analysts fear that, with mounting tensions and the greater militarisation of the conflict, such moves may provoke Russia to respond more forcefully and definitively. They are particularly concerned with the implications this has for the use of nuclear weapons. 

Moscow has already issued stern warnings against such moves, describing them as escalatory. “Constant escalation can lead to serious consequences,” Russian President Vladimir Putin told reporters in late May, cautioning, “if these serious consequences occur in Europe, how will the United States behave, bearing in mind our parity in the field of strategic weapons? ... It’s hard to say – do they want a global conflict?” 

The likelihood of this is borne out not only by the recent intensification of Russian strikes across Ukraine but also by Moscow’s drive to strengthen its security alliances with Beijing and Pyongyang, in anticipation of more extensive confrontations with the West in Ukraine in the next phase.

Will the European Commission’s decision to transfer the income from frozen Russian assets and Western decisions regarding the use of weaponry accomplish their stated aim of strengthening Ukraine’s defences? The economic and military attrition that Ukraine has sustained is already severe and may be difficult to staunch, while the strength and cohesion of Russian forces cast doubts on the West’s ability to reverse the current course of the war.

* A version of this article appears in print in the 1 August, 2024 edition of Al-Ahram Weekly