Russia on Wednesday said a proposal by European Union foreign policy chief Josep Borrell to take 90% of revenues from Russian assets frozen in Europe and transfer them to buy weapons for Ukraine was "banditry and theft".

Under Borrell's plan, proceeds from the assets such as interest payments would go to the European Peace Facility, an off-budget fund that provides military aid to countries outside the EU and has been used mainly for Ukraine.

The Kremlin said such plans - if implemented - would destroy Europe's reputation as a reliable guardian of property rights and lead to years of litigation.

"Europeans are well aware of the damage such decisions can do to their economy, their image, and their reputation as reliable, so to speak, guarantors of the inviolability of property," Kremlin spokesman Dmitry Peskov said.

"The damage will be inevitable. The persons who will be involved in making such decisions, the states that will decide this, of course, they will become the objects of prosecution for many decades."

Some 70% of all Russian assets immobilised in the West are held in the central securities depository Euroclear in Belgium, which has the equivalent of 190 billion euros ($206 billion) worth of various Russian central bank securities and cash.

When asked about Borrell's plan, Maria Zakharova, spokeswoman for Russia's foreign ministry, said: "It is simple banditry and theft."

Zakharova said that Russia would respond if the West went ahead with confiscating Russian assets. Russia has said it will take action against Western assets if its own property is seized.

EU closer to buying arms for Ukraine with frozen Russian asset profits

 The European Union is pressing ahead with a plan to use the profits generated from billions of euros of Russian assets frozen in Europe to help provide weapons and other funds for Ukraine, a senior official said Tuesday.

EU foreign policy chief Josep Borrell got a green light for the plan from most of the bloc’s foreign ministers this week, and he hopes that EU leaders will endorse it at a summit in Brussels starting Thursday. The move comes as Ukraine runs dangerously low on munitions, and U.S. efforts to get new funds for weapons have stalled in Congress.

The 27-nation bloc is holding about €200 billion (U.S. $218 billion) in Russian central bank assets, most of it frozen in Belgium, in retaliation for Moscow’s war against Ukraine. The EU estimates the interest on that money could provide around €3 billion each year.

“The Russians will not be very happy. The amount of money, 3 billion per year, is not extraordinary, but it is not negligible,” Borrell told reporters.

A small group of member countries, notably Hungary, refuse to supply weapons to Ukraine, so these windfall profits would be divided up. Around 90% of the money would be put into a special fund that many EU countries already use to get reimbursed for arms and ammunition they send.

The other 10% would be put into the EU budget to help bolster Ukraine’s defense industry. Countries that object to sending weapons could then claim that they are not arming the country, Borrell said.

The EU budget can’t be used to buy arms, under current expert interpretations of the bloc’s treaties, but the special fund — known as the European Peace Facility — runs off-budget and doesn’t have to respect the same legal standards or be approved by the European Parliament.

The European Central Bank has warned against seizing Russian assets, as this could undermine confidence in the euro currency and EU markets. But Borrell said that no assets would be taken, only the windfall profits they make. He added that the bank has been consulted on the plan.

Some EU leaders, including Belgian Prime Minister Alexander De Croo, have said that they want to use the windfall profits to fund Ukraine’s reconstruction, but Borrell said he believes “the best thing is to avoid that anything is destroyed” in the first place.