Kremlin pledges legal action over planned EU transfer to Ukraine of interest accrued on frozen assets

By Dmitry Antonov

MOSCOW (Reuters) - The Kremlin on Tuesday called a European Union plan to use interest earned on frozen Russian assets to fund military aid to Ukraine "theft" and said it would take legal action against anyone involved in the decision.

The EU's top diplomat, Josep Borrell, on Monday said that the first tranche of 1.4 billion euros in military aid for Ukraine taken from proceeds earned on frozen Russian assets would be made in early August.

"Such thievish actions cannot remain without reciprocity," Kremlin spokesman Dmitry Peskov told reporters. "This money is not only essentially stolen, but will also be spent on the purchase of weapons."

"Definitely, we will work out the possible legal prosecution of those people who are involved in decision-making and the implementation of these decisions, because this is a direct violation of international law, it is a violation of property rights."

After President Vladimir Putin sent troops into Ukraine in 2022, the United States and its allies prohibited transactions with Russia's central bank and finance ministry, blocking around $300 billion of sovereign Russian assets in the West.

European Union countries are taking the interest earned on those frozen assets - essentially bonds and other types of securities in which the Russian central bank had invested - and putting them into an EU fund which will be used to help Ukraine.

The EU expects the assets to yield about 15-20 billion euros ($16-$22 billion) in profits by 2027.

Putin says the West unleashed what he casts as an economic war against Russia but has touted both the resilience of the Russian economy, which grew 3.6% last year, and the failure of sanctions of stop Russian trade.

The Kremlin has repeatedly said that any seizure of its assets would go against all the principles of free markets which the West proclaims and that it would undermine confidence in the U.S. dollar and euro while deterring global investment and undermining confidence in Western central banks.

The Russian Foreign Ministry on Tuesday said Moscow would have a tough response to Europe's use of any revenues from Russian assets, the state-run RIA news agency reported.

(Reporting by Dmitry Antonov; Writing by Guy Faulconbridge; Editing by Andrew Osborn)