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Russia has warned that it is considering retaliatory actions in response to the European Union’s decision to transfer the proceeds from frozen Russian assets to Ukraine.

What’s the deal: Recently, the European Union decided to allocate the interest earned from frozen Russian assets—around 1.5 billion euros—to support Ukraine. This move is part of a larger strategy to bolster Ukraine’s defense and reconstruction efforts amidst the ongoing conflict with Russia.

What the EU said: After announcing the transfer of €1.5 billion to Ukraine, EU chief Ursula von der Leyen stated, “There is no more fitting use for the Kremlin’s funds than to enhance the safety of Ukraine and all of Europe. The EU stands firmly with Ukraine. Today, we are channeling €1.5 billion from frozen Russian assets into Ukraine’s defense and reconstruction efforts.”

Russia’s stance: Russia has repeatedly warned that transferring any frozen Russian assets to Ukraine would constitute an “unprecedented violation” of international law. Kremlin spokesman Dmitry Peskov also indicated that Russia would respond with a “thoughtful” approach.

Frozen Russian $ in Europe: In response to Russia’s invasion of Ukraine, the European Union froze approximately $217 billion in Russian central bank assets. About 90% of these assets are managed by Euroclear, an international deposit organization based in Belgium.

What will Ukraine use the money for: According to the EU, 90% of the funds will be directed to the European Peace Facility, a central fund used to finance arms for Ukraine. The remaining 10% will be allocated to the EU’s Ukraine Facility to assist with the country’s reconstruction efforts.