BRUSSELS - The European Commission proposed on Wednesday transferring to Ukraine profits of 2.5 to 3 billion euros ($2.7-3.3 billion) per year generated by Russian central bank assets frozen in Europe after Moscow invaded Ukraine in 2022.

Ninety percent will be channelled through the European Peace Facility fund to buy weapons for Ukraine. The rest will be used for recovery and reconstruction.

The exact amount available for Kyiv each year will depend on global interest rates as the profits are the returns on some 210 billion euros of Russian central bank assets held in various currencies in the 27-nation EU.

On top of these profits, Ukraine will also receive every year the 25% tax that the Belgian government puts on the profits. For 2024, this is expected to amount to 1.7 billion euros, of which 1.5 billion euros will be paid this year.

The total financial contribution for Ukraine from frozen Russian assets in the EU will therefore total 4.0-4.5 billion euros this year.

Once the Commission proposal is approved by EU governments the profits are set aside for Ukraine twice a year, with a first tranche already in July.

The Russian assets are held by EU central securities depositories, mainly Belgium's Euroclear, which will keep 3% for operational expenses and temporarily retain 10% of the profits as a safeguard against legal action by Russia.

The amount temporarily retained might be raised if needed, the Commission said. After the war, all the money, unless used to cover legal claims by Moscow, will be passed to Ukraine.

European Commission Executive Vice President Valdis Dombrovskis said Russia was being held to account for the massive damage it had caused.

"Our proposal will redirect substantial windfall revenues from frozen Russian state assets for the benefit of Ukraine and its people, to the tune of up to 3 billion euros a year," he said.

Dombrovskis said the EU had coordinated its move with the G7 countries - the United States, Canada, Britain and Japan.

The EU proposal does not envisage, for now, the confiscation of the capital of the Russian assets, only the use of the profits they generate.

Ukrainian Prime Minister Denys Shmyhal said Kyiv expected the EU and G7 countries, which together hold the equivalent of some 260 billion euros of frozen Russian assets, to take a further step and to confiscate the capital itself.

"We insist on the full confiscation or other use of all frozen assets... Europe and the world need an effective precedent for making the aggressor pay a heavy price for the destruction it has caused in Ukraine," he told a news conference in Brussels. REUTERS