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The European Union is debating a controversial plan to use frozen Russian assets to finance Ukraine, raising legal, political, and economic concerns.
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EU frozen Russian assets Ukraine
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Russia frozen assets Europe
EU Ukraine funding plan
Euroclear Russian assets
Belgium opposes EU proposal
Russia reparations loan
‘Never Been Done Before’: EU Faces High-Stakes Decision on Using Russia’s Frozen Assets
The European Union is approaching a historic and controversial decision: whether to use frozen Russian state assets to provide billions of euros in additional support for Ukraine.
EU leaders are expected to debate the proposal at a crucial summit scheduled for Thursday and Friday, as divisions within the bloc intensify — particularly with Belgium, where most of the assets are held.
Why the Proposal Is So Controversial
The plan would mark an unprecedented step in international finance and sanctions policy, drawing warnings from critics who say it could:
- Be legally questionable
- Trigger retaliation from Moscow
- Undermine Europe’s financial credibility
Despite the risks, supporters argue that Europe must find new ways to fund Ukraine, as the war drags on and public finances come under pressure.
What Assets Are Being Discussed?
In 2022, the EU froze assets belonging to Russia’s central bank as part of sanctions over Moscow’s invasion of Ukraine.
Current Situation
- Assets are worth roughly €210 billion ($246 billion)
- Mostly held in bonds, now increasingly converted into cash
- Until now, the EU has only used interest generated from these assets to support Kyiv
The European Commission’s New Plan
On December 3, the European Commission proposed going further by using the principal amount of the assets.
How the Loan Would Work
- The EU would lend Ukraine money backed by frozen Russian assets
- Ukraine would repay the loan only if Russia eventually pays reparations
- The assets are referred to as “cash balances” because sanctions block any payments back to Russia
“We’re taking the cash balances and providing them to Ukraine as a loan,”
— Ursula von der Leyen, European Commission President
How Much Money Is at Stake?
The Commission wants to lend €90 billion ($105 billion) to Ukraine over the next two years.
Why This Matters
- Covers about two-thirds of Ukraine’s estimated civilian and military funding needs for 2026–2027
- Would represent the largest single financial mechanism yet created for Ukraine using Russian assets
The proposal requires approval by a qualified majority of EU states — more than half of members representing at least 65% of the EU population.
Alternative Plan: Borrowing From Markets
Alongside the reparations loan, the Commission proposed a backup option:
- EU borrows from investors
- EU budget used as a guarantee
- Funds then lent to Ukraine
However, this plan requires unanimous approval, meaning countries like Hungary and Slovakia could veto it.
Why Belgium Is Strongly Opposed
Belgium plays a central role because Euroclear, a Belgium-based financial services company, holds most of the frozen Russian assets.
Belgium’s Concerns
Belgian officials argue the plan:
- Has never been done before
- Exposes Belgium to legal and financial risks
- Could provoke Russian countermeasures
“We consider this option the worst of all,”
— Maxime Prévot, Belgium’s Foreign Minister
Legal and Financial Risks Highlighted
Experts warn that guarantees offered by the EU may not cover:
- Legal costs from lawsuits
- Retaliatory actions against Euroclear
- Broader financial exposure
A professor of EU law at Ghent University said Belgium could be left carrying costs that are not currently insured under the proposal.
Russia Pushes Back Hard
Russia has already responded aggressively.
Moscow’s Reaction
- Russia’s central bank has filed a lawsuit seeking billions in damages
- Kremlin officials have labeled the plan illegal
- A senior Russian banker called it “robbery”
The Kremlin has warned that any seizure or repurposing of the assets would not go unanswered.
Wider EU Concerns
Other EU countries, including Italy and the Czech Republic, have also voiced reservations.
Key worries include:
- Financial guarantees burdening national budgets
- Risk of discouraging foreign investment in Europe
- Precedent for sanctions affecting future investors
Some fear countries like China could rethink investing in Europe if sovereign assets can be repurposed during sanctions.
Where the United States Stands
The US has proposed a different approach.
US Position
- A leaked US-backed peace plan suggested investing $100 billion of frozen Russian assets globally
- The US would lead reconstruction efforts and receive investment profits
- Most frozen assets are held in Europe, not the US
This puts Washington’s ambitions at odds with the EU’s reparations loan proposal.
EU Holds the Strongest Leverage
By agreeing to indefinitely freeze Russian assets, the EU retains significant influence over future negotiations.
“The future of these assets cannot be decided by the US or Russia alone,”
— EU law experts
Ukraine Warns Funding Is Critical
Ukrainian President Volodymyr Zelensky has warned that without sustained funding, Ukraine’s economy and war effort could collapse.
“Without such support, I don’t see the possibility for Ukraine to hold on,” he said.
European allies have already allocated $221 billion in aid since 2022 — far more than recent US contributions.
A Defining Moment for Europe
The debate over EU frozen Russian assets and Ukraine funding has become a defining test for Europe’s:
- Unity
- Legal principles
- Financial credibility
- Commitment to Ukraine
Whatever decision EU leaders make, the consequences will echo far beyond the war itself.
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