Moscow warns of 'painful response' if EU uses Russian assets to fund Ukraine

Russia says that desperate attempts by the West to take the income from frozen Russian assets were criminal.

Russian Foreign Ministry spokesperson Maria Zakharova in remarks on Thursday said that the move would lead to a response from Moscow that would be very painful for the European Union.

"We know about the supposedly reached fundamental agreements within the G7 to provide Ukraine with another loan of 50 billion dollars pledged against future revenues from managing Russian assets. Such a step will not lead the West to anything good. This illegal initiative, linked to attempts to pump up the Kyiv regime with money at someone else's expense, threatens to completely unbalance the financial system and create cataclysmic crises," she said. 

"In addition, there is enough European property and money in Russia, as you know, our government representatives have repeatedly spoken about this, and inevitable retaliatory measures will be extremely painful for Brussels. So they will have to pay for their madness out of their own pocket first and foremost."

A plan to use frozen Russian assets for war-torn Ukraine will dominate the Group of Seven countries talks in Italy on Thursday.

Group of Seven countries and the European Union are weighing how to use profits generated by Russian assets frozen in the West to provide Ukraine with a large loan to secure Kyiv's financing for 2025.

After initially advocating a straightforward confiscation of Russian assets, the United States is now on board with the European plan to use the interest generated by the frozen assets instead.

A senior US official said that the G7 had reached an agreement on tapping future interest from about $300bn in frozen Russian assets to provide a $50 billion loan to Ukraine.

“We have political agreement at the highest levels for this deal. And it is $50bn this year that will be committed to Ukraine,”  the official told reporters on the sidelines of the G7 meeting.

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Concerns have also been raised that third countries like China could reduce investments in the West for fear that assets could be seized.

Since Moscow launched its military operation in Ukraine in late February, the administration of US President Joe Biden has slapped a slew of sanctions against Russian officials and its financial institutions.

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Russian President Vladimir Putin himself, his closest advisers and major banks have been targeted in the coordinated US attempt to cut off finances and deal a blow to the Russian economy.

Russia is also threatening retaliation. Putin signed a decree in May authorizing the confiscation in Russia of assets belonging to the United States or "associated" individuals.

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