UK to Allocate Windfall Profits from Frozen Russian Assets to Bolster Ukraine’s Defense Sector
In a landmark move signaling both strategic solidarity and legal innovation, the United Kingdom has committed to channeling extraordinary revenues accrued from frozen Russian sovereign assets into Ukraine’s defense sector. The agreement, signed between the UK Ministry of Defence, Ukraine’s Ministry of Defence, and the Ministry for Strategic Industries, marks a pivotal step under the G7-led Extraordinary Revenue Acceleration (ERA) initiative.
The Gaze reports on this with reference to the Ministry of Defence of Ukraine.
Under the arrangement, Ukraine is set to receive $3 billion across 2025-2026. These funds will be used to procure Western-manufactured defense equipment, repair and service military hardware, and support collaborative defense ventures involving Ukrainian and international companies. Crucially, part of the funding will also be directed toward purchasing critical materials produced domestically, helping to stimulate Ukraine’s defense-industrial base.
“The significance of this financing goes far beyond numbers – it is a principled response to aggression and a recognition of Ukraine’s sovereign right to defend itself,” stated Serhiy Boiev, First Deputy Minister of Defence of Ukraine. “It transforms frozen assets into active support for freedom and security.”
The UK’s delegation was represented by Major General Anna-Lee Reilly, Director of Strategic Capability Integration at the Ministry of Defence, who reaffirmed Britain’s long-standing commitment to Ukraine’s defense and resilience in the face of Russia’s war of attrition.
According to David Aloyan, Deputy Minister for Strategic Industries, Ukrainian defense firms currently have an estimated production capacity of $35 billion, but insufficient liquidity prevents full utilization. “Redirecting windfall profits from Russian assets into our defense industry is not just symbolic, it’s transformative. It will unlock capacity, accelerate repairs, and deepen international cooperation,” he explained.
The ERA initiative, jointly developed by G7 countries, aims to use profits generated from immobilized Russian assets to repay loans provided to Ukraine. With a total envelope of up to $50 billion, it represents one of the most ambitious examples of asset repurposing in modern international finance.
Kyiv has expressed gratitude to the British government for its leadership in advancing not only urgent security assistance but also long-term strategic partnership with Ukraine.
As The Gaze reported earlier, on May 9, at a pivotal Europe Day summit in Lviv, UK Foreign Secretary David Lammy reaffirmed the United Kingdom’s unwavering commitment to Ukraine, announcing nearly £25 million in new humanitarian aid and backing the establishment of a Special Tribunal to prosecute Russian aggression.