European leaders aim to endorse controversial plans to use Russian frozen assets to support Ukraine at a meeting in Brussels on Thursday.
The unprecedented proposal for what the EU has dubbed a reparations loan would see Kyiv receive €140bn (£121bn) worth of frozen Russian state assets currently held by Euroclear, a Belgium-based financial institution.
The plan has been months in the making, partly due to the legal complexities surrounding it, as well as concerns from member states about upsetting global financial stability. Belgium in particular has been reluctant to back using the frozen assets, as it is nervous about having to shoulder any potential consequences should Russia legally challenge Euroclear.
Russia has reacted angrily to any suggestions that the EU could use its money. Any confiscatory initiatives from Brussels will inevitably result in a painful response, Russian Foreign Ministry spokeswoman Maria Zakharova said.
For the EU, the problem of how to continue to support Kyiv's struggle against Russian aggression has become more urgent since US support for Ukraine has dwindled. As of July, EU member states have provided about €177.5bn (£154bn) in financial support for Ukraine. But in the absence of any progress towards a ceasefire deal, Ukraine will need more money as Russia's full-scale war approaches its fifth year. The price tag of Ukraine's reconstruction and recovery is also estimated by the UN and World Bank to be well above $486bn (£365bn; €420bn).
About €210bn (£182bn) in Russian investments was frozen by the EU when Moscow launched its full-scale invasion in February 2022. The biggest share – some €185bn – is sitting in Euroclear, a clearing house for financial transactions in Brussels which operates under EU jurisdiction.
When they were first frozen, the majority of these Russian investments were in the form of sovereign bonds – a type of loan made to a government which is paid back over a period of time. These bonds have now matured; in other words, Russia is due to get both its initial loan back as well as interest. But because of the sanctions imposed against it in 2022, Moscow cannot access this money.
The EU has been using the interest from Russian frozen assets for Ukraine's defence since spring 2024, which amounts to up to €3bn per year. The EU is now considering redirecting the frozen funds themselves to Ukraine as a zero-interest reparations loan. The much-needed liquidity would be available immediately – on the understanding that Kyiv would repay it through reparations from Moscow once the war ends.
International law stipulates that sovereign assets cannot be confiscated outright. Although frozen, these assets remain Moscow's property and seizing them is legally challenging. To address this issue, the EU could borrow Russia's frozen money held by Euroclear and replace it with an IOU backed by all member states underwriting the debt.
This solution could offset Euroclear's concerns regarding how to pay Russia back should the war end suddenly and Moscow demand its assets back. While Belgium remains skeptical unless it receives assurances that risks would be shared by all member states, other nations are more supportive. Poland and Baltic states have shown enthusiasm, with some leaders calling the plan ingenious.
Nonetheless, any path of action involves significant legal and financial complexities, and further discussions will shape its feasibility moving forward.
