EU Endorses Permanent Freeze on Russian Assets Ahead of Ukraine Loan Initiative

European Union member states have reached a consensus to indefinitely immobilize Russian assets totaling up to €210 billion (£185 billion), which have been frozen since the onset of Russia’s extensive invasion of Ukraine.

Most of these funds are stored in the Belgian financial institution Euroclear. European leaders are optimistic about securing an agreement at the upcoming critical EU summit next week, aiming to repurpose these resources as loans to assist Kyiv in sustaining its military operations and economic stability.

After nearly four years of conflict, Ukraine is facing severe financial strain and requires approximately €135.7 billion (£119 billion; $159 billion) over the next two years. Europe intends to contribute about two-thirds of this sum, but Russian officials have accused the EU of misappropriation.

On Friday, the Central Bank of Russia announced its intention to initiate legal proceedings against Euroclear in a Moscow court, reacting to the proposed EU loan strategy. Following the full-scale invasion of Ukraine in February 2022, Russia’s assets within the EU were frozen, with €185 billion held by Euroclear.

The EU and Ukraine contend that these funds should be allocated for reconstruction efforts to address the damages inflicted by Russia. Brussels refers to this as a ‘reparations loan’ and has devised a strategy to bolster Ukraine’s economy with €90 billion.

“It is only just that the assets frozen from Russia be used to restore what has been destroyed by them—and that capital ultimately becomes ours,” stated Volodymyr Zelensky, President of Ukraine.

German Chancellor Friedrich Merz remarked that these assets would empower Ukraine to effectively shield itself from potential future aggressions from Russia.

The legal action from Russia was anticipated in Brussels, with European Economic Commissioner Valdis Dombrovskis asserting that EU financial entities are ‘fully safeguarded’ against legal challenges. However, Belgium is also expressing concerns regarding the potential financial burden following any negative outcomes, with Euroclear’s CEO Valérie Urbain cautioning that utilizing the assets might ‘destabilize the global financial landscape.’

Belgian Prime Minister Bart De Wever has outlined a series of ‘rational, reasonable, and justified conditions’ that must be met before he can endorse the reparations plan, and he has not dismissed the possibility of pursuing legal action if it poses significant threats to Belgium.

As the EU races against time ahead of next Thursday’s summit, it strives to formulate a resolution acceptable to Belgium. Until now, the EU has refrained from directly accessing the assets, but has been providing ‘windfall profits’ from them to Ukraine since last year, amounting to €3.7 billion in 2024. Utilizing the interest has been deemed legally secure since Russia remains under sanctions and the proceeds do not belong to the Russian government.

Nonetheless, military assistance for Ukraine has seen a marked decline in 2025, with Europe struggling to fill the funding gap left by the US’s decision to drastically reduce support for Ukraine under former President Donald Trump.

Currently, there are two proposals within the EU aimed at generating €90 billion to address Ukraine’s funding requirements. One option involves raising funds through capital markets, guaranteed by the EU budget—a route preferred by Belgium but contingent on unanimous approval from EU leaders, which may prove challenging with Hungary and Slovakia opposing military funding for Ukraine.

This leaves the alternative of loaning Ukraine money derived from the Russian assets, which were initially in securities but have now predominantly converted into cash. These funds are classified as Euroclear’s property held within the European Central Bank.

The European Commission acknowledges Belgium’s valid concerns and expresses confidence in having addressed them. The proposed plan includes providing Belgium with a guarantee covering the entirety of the €210 billion in Russian assets located within the EU.

In the event that Euroclear incurs a loss of its assets in Russia, a Commission representative indicated this would be compensated by assets belonging to Russia’s clearing house situated in the EU. Any judgment from a Russian court targeting Belgium would not be acknowledged within the EU.

In a significant development, EU ambassadors have concurred that the assets of Russia’s central bank held in Europe should remain immobilized indefinitely. Previously, a unanimous vote every six months was required to extend the freeze, which posed a recurring risk to Belgium.

Utilizing an emergency clause from Article 122 of the EU Treaties, EU ambassadors have ensured that the assets will continue to be frozen as long as there is an ‘immediate threat to the economic interests of the union’ or until Russia fulfills its war reparations to Ukraine.

Swedish Finance Minister Elisabeth Svantesson described the decision as a crucial step towards facilitating further support for Ukraine and safeguarding democratic values.

Belgium maintains its position as a devoted ally of Ukraine but is wary of the legal implications associated with the plan and is concerned about being left to manage any fallout if complications arise.

The typically fragmented political landscape has unified behind Prime Minister Bart De Wever, who is facing pressure from his European counterparts. During a meeting with UK Prime Minister Sir Keir Starmer in London on Friday, he stated that ‘very important decisions’ would unfold over the coming week. He emphasized that Belgium and the UK would collaborate to ensure support for Ukraine, enabling it to remain a free, democratic, and sovereign nation.

The EU believes it can secure adequate assurances for the loan, but Belgium is apprehensive about the potential for additional damages or penalties. ‘Belgium is a small economy. With a GDP of about €565 billion, just imagine the burden of a €185 billion bill,’ remarked Veerle Colaert, a financial law professor at KU Leuven University.

She also expressed concerns that requiring Euroclear to extend a loan to the EU could violate EU banking regulations. ‘Banks must adhere to capital and liquidity standards and should avoid concentrating risk. Now, the EU is instructing Euroclear to do precisely that.’

Colaert queried the rationale behind existing banking regulations, which are intended to ensure stability. ‘Should things go awry, it would fall upon Belgium to rescue Euroclear. This underscores the necessity for Belgium to secure robust guarantees for Euroclear.’

Time is of the essence, as seven EU member states, particularly those geographically closest to Russia, including the Baltics, Finland, and Poland, urge the urgency of the frozen assets plan. They perceive this approach as the ‘most financially viable and politically practical solution.’

“This is a matter of destiny for us,” declared prominent German conservative MP Norbert Röttgen. “If we fail, I cannot foresee our next steps. Therefore, it is imperative that we succeed within the week.”

While Russia firmly asserts that its funds should remain untouched, there are increasing concerns among European officials that the United States may have alternative plans for utilizing Russia’s frozen billions as part of its own peace initiative.

Zelensky has indicated that Ukraine is collaborating with both Europe and the US on a reconstruction fund, yet he remains cognizant of the US engaging in discussions with Russia regarding future cooperation.

An early version of the US peace proposal mentioned the use of $100 billion from Russia’s frozen assets by the US for reconstruction, with the US retaining 50% of the profits and Europe contributing another $100 billion. The remaining assets would potentially be allocated to a joint investment project involving the US and Russia.

An EU insider pointed out that the anticipated vote on Friday to immobilize Russia’s assets indefinitely would complicate any efforts to divert the funds elsewhere. This implies that the US would need to persuade a majority of EU member states to endorse a plan that could impose a substantial financial burden on them.

Hungary’s Viktor Orban, perceived as one of Russia’s closest allies within the EU, criticized European leaders for allegedly placing themselves above established regulations and substituting the rule of law with bureaucratic authority.