Russian assets frozen in European accounts are generating billions of dollars in interest payments that could be diverted to help repair Ukraine’s war-torn economy — and the European Union just took a step closer to doing that.

After Russia’s full-scale invasion of Ukraine in February 2022, Western countries froze nearly half of Moscow’s foreign reserves — some €300 billion ($327 billion). Around €200 billion ($218 billion) sits in the European Union — mostly at Euroclear, a financial institution that keeps assets safe for banks, exchanges and investors.

EU leaders agreed a crucial $50 billion funding package for Ukraine on Thursday and came closer to finalizing a plan to use the profits piling up in Euroclear’s accounts.

In a statement issued at the end of a summit, EU leaders said “potential revenues could be generated … concerning the use of extraordinary revenues held by private entities stemming directly from the immobilised Central Bank of Russia assets.”

Belgium-based Euroclear disclosed Thursday that it has earned €5.2 billion ($5.6 billion) in interest on income generated by sanctioned Russian assets since they were frozen by EU and Group of Seven countries in 2022.

“The number of sanctions and countersanctions that have been introduced since February 2022 are unprecedented and continue to have a significant impact on the daily operations of Euroclear,” the group said in a statement.

The European Union and its allies are determined to make Russia foot part of the colossal bill for rebuilding Ukraine — estimated by the World Bank a year ago at $411 billion over the next decade.

One proposal put forward by the European Commission would involve using a special levy to collect the windfall interest income, which would then be paid into the EU budget for the reconstruction of Ukraine.

That plan has been delayed by legal and financial concerns, with some EU member states and the European Central Bank worried that even carefully targeted measures could fall foul of international law and shake confidence in the euro as the world’s second biggest reserve currency. The EU has been at pains to contrast the illegality of Russia’s invasion with its own strict adherence to the rule of law.

EU member countries have now agreed in principle to tap this windfall interest income, although the details of how this will be done practically must still be ironed out, an EU diplomat told CNN. Lawyers are working on the text of the agreement before returning it to EU member states for final approval.

In its earnings statement, Euroclear — which settles cross-border trades and safeguards more than $40 trillion in assets — said it was focused on “minimising potential legal and operational risks” that may arise from proposals by EU officials to hand the money to Ukraine.

Euroclear said additional administrative costs relating to the sanctions cost it €62 million ($67 million) last year, “with considerable senior management and board focus on the topic.”

It added that cash on its balance sheet soared €38 billion ($41 billion) year-on-year to €162 billion ($175 billion), boosted by payments associated with frozen Russian assets, including bonds.

These payments include, for example, interest paid on bonds, known as coupons, or the proceeds generated by securities that mature and are reinvested.

Ordinarily, these payments would have been made to Russian bank accounts, but they have been blocked by the sanctions and are generating vast amounts of interest — even more so given the recent spate of rate hikes.

Euroclear, for its part, is embroiled in several legal proceedings pertaining to the sanctions — almost exclusively in Russian courts — as claimants seek to access the assets blocked in its books.

The company said it continues to retain profits related to these assets “until further guidance is provided on the distribution or management of such profits.”

Hungary opposes billions in new EU aid for Ukraine. A new summit will try to change that

European Union leaders at a summit on Thursday will focus on the one member state blocking a 50-billion-euro ($54 billion) war support package for Ukraine: Hungary, the country in the bloc with the closest ties to Russia.

Almost two years after Russian President Vladimir Putin launched the invasion of Ukraine, the war has ground to a virtual stalemate and Ukraine desperately needs financial assistance.

“Securing agreement is vital for our credibility, and not least for our commitment to provide steadfast support to Ukraine,” EU Council president Charles Michel said in his invitation letter to leaders of the 27-member bloc. Ukrainian President Volodymyr Zelenskyy is expected to take part with a video speech, according to Michel's office.

The aid requires unanimous support. But Hungarian Prime Minister Viktor Orban vetoed it at a previous summit in December and continues to oppose it.

“In December, we still had a little time. But from March onwards, Ukraine will start running into difficulties according to international financial institutions,” a senior EU diplomat warned ahead of the meeting in Brussels. The official spoke on condition of anonymity in accordance with EU practices.

For most EU countries, helping Ukraine is crucial to protect the bloc from Russia's threats and maintain its credibility on the global stage.

"Ukraine is on European soil. It is a European country. And if we want a peaceful and stable Europe, we need to be credible in terms of our own security and defense vis-à-vis all our neighbors,” French president Emmanuel Macron said.

Orban has repeatedly angered EU leaders since Russia's full-scale invasion in 2022. He criticized EU sanctions on Russia as being largely ineffective and counter-productive. He pushed for peace talks between Moscow and Kyiv, though he hasn’t detailed what that might mean for Ukraine’s territorial integrity.

At the previous EU summit, however, Orban did not prevent the EU from starting membership negotiations with Ukraine.

Concerned about democratic backsliding by Orban’s government, the EU has frozen Hungary’s access to tens of billions of euros in funds. Hungary, with its own economic concerns, has responded by vetoing some EU political decisions.

Instead of unlocking the new aid for Ukraine, Orban has proposed to split it into annual tranches and introduce a review mechanism. But that idea has not been well received because it would allow Orban to block the money later.

If the stalemate remains, it will not mean that Ukraine will suddenly be deprived of EU assistance. The EU diplomat said leaders will make sure it won't impact Ukraine in the short term.

The 26 other countries could decide, on a voluntary basis, to decouple the aid from the EU budget. But it’s not their favorite option since it would require approval from several national parliaments, creating more uncertainty.

Another scenario could see EU leaders extending by one year the 18 billion euros ($19.5 billion) in financial assistance they provided in 2023 to Ukraine from another program, and top it up with additional loans. That could be adopted with a qualified majority, meaning Hungary could not stop it.

In total, EU support to Ukraine since the war began amounts to some 85 billion euros ($92 billion), according to EU figures. That includes more than 40 billion euros ($43 billion) to support Ukraine’s economy, around 27 billion euros ($29.2 billion) in military assistance measures and over 17 billion euros ($18.4 billion) to help EU member states support Ukrainians fleeing the war.