Austria pulls out

Chancellor’s Ukraine line draws criticism in the EU

Karl Nehammer (ÖVP) is looking increasingly isolated at EU level.

(Bild: AFP)

At the EU summit, Federal Chancellor Karl Nehammer (ÖVP) made it clear that he would rather use Russian assets for the reconstruction of Ukraine than for arms purchases. Austria has been heavily criticized for this on the international stage. It has also become known that Austrian diplomats are putting pressure on Kiev on other issues.

Nehammer wants to "support" Ukraine. He announced this to reporters on Thursday. When it comes to the question of how, however, the chancellor is relatively lonely on the international stage - and then also next to troublemakers such as Putin's friend Viktor Orbán. Nehammer is skeptical about the plan to buy weapons for Ukraine with interest profits from confiscated Russian assets.

Put profits into "something good"
"According to the Austrian idea, a lot should be invested in reconstruction," explained the Chancellor. The position of the neutrals is clear: "We must support the state of Ukraine so that it can continue to exist." However, the profits should be invested in "something good". 

Russian gold vein

• The West has frozen almost half of Moscow's currency reserves abroad.
• Around 200 billion euros are in the EU. Mainly at Euroclear, a financial institution in Brussels.
• The company collects large sums through interest payments on bonds and proceeds from share transactions, for example.
• Interest profits amounting to 5.2 billion euros are said to have accumulated since the start of the war. The EU now wants to siphon these off for Ukraine.

The international response ranges from astonishment to outrage. The republic, which is still transferring billions to the Kremlin for Russian gas, is once again being fiercely attacked and denigrated as "Oblast Austria" by Romania, for example.

The Ukrainian diaspora association "Mrija" also criticized Nehammer. The organization asked whether the Federal Chancellor was on the side of Ukraine or the "terrorist state of Russia". "It is already the time to make final decisions."

Belgium finds Nehammer proposal "a bit pointless"
Belgian Prime Minister Alexander De Croo, whose country currently holds the rotating presidency of the EU Council, tried a less brute approach: "Of course I would like to invest in reconstruction, but it's a bit pointless to invest in reconstruction if you risk losing the country."

The Chancellery told krone.at that Nehammer was sticking to his line. His statements left no room for interpretation. Austria would not participate in arms deliveries. The task now was to examine and work out the legal framework at EU level.

A first draft of how "banknotes are to be exchanged for weapons" already exists. Skeptics such as Nehammer are to be accommodated. The profits from the confiscated Russian assets are to be divided up and channeled into different pots of money. This will give neutral states such as Austria the chance to save face.

Karl Nehammer (ÖVP) is looking increasingly isolated at EU level.

(Bild: AFP)

Those who deliver have access to the money pot
90 percent of interest profits are to flow into the peace facility. Many EU countries already use this special fund to be reimbursed for the costs of weapons and ammunition that they ship. According to the plan, the remaining ten percent is to be put into the EU budget. This will allow Russian money to flow into the reconstruction of Ukraine.

Countries such as Austria or Hungary can therefore claim that they are not benefiting from Russian assets. After all, those who do not send weapons to Kiev will not receive any compensation payments from the special fund.

The EU plans are fraught with legal risks. There is a possibility that the money will have to be returned after the war if Russia takes legal action. Critics of the plan are concerned that the EU's reputation as a safe haven for investors could be damaged as a result.

Vienna puts pressure on Kiev
In another matter, however, Austria's diplomats are said to be actively working against Kiev. Ukraine could soon abandon its blacklist, on which companies are denounced as "sponsors of the war".

Side by side with Hungary?

(Bild: AFP)

The reason for this is pressure from several countries, as the Reuters news agency learned from two people familiar with the matter. "It's China, but not just China," said one of them. The other explained that Austria, France, Hungary and China had all exerted pressure on Kiev. The list could disappear from the internet within days.

Ukraine disturbed by RBI shutdown
There is no legal basis for the list of around 50 companies - but it has enormous symbolic significance. After all, who wants to do business with a "war sponsor"? The companies listed are accused of continuing to be active in Russia and promoting the Russian war of aggression against Ukraine by paying taxes, for example.

The Russian business of the Austrian Raiffeisen Bank International (RBI) is a thorn in Ukraine's side. Last spring, the bank was placed on the list of war sponsors. Kiev justified the listing of RBI with its activities in Russia. It was also pointed out that there has been no progress regarding the sale of the subsidiary bank.

RBI has not yet found a way to bring the billions in profits from Russia to Austria. Due to Western sanctions, the bank has no access to its profits. Critics claim that this is the main reason why the bank has remained in the country so far.

RBI as "Putin's cash machine"
It is not the first time that Austria has become active in the case. In the run-up to the adoption of the twelfth package of sanctions against Russia, EU diplomats said that the Austrian government had already campaigned for RBI with Kiev at the time. This has not been officially confirmed.

The fact is that Ukraine has removed the Austrian bank from its blacklist. It is also true that RBI has an unflattering nickname in EU circles: "Putin's ATM!"