Why the EU could not agree to use the frozen Russian assets for Ukraine

EU leaders agreed on 18-19 December to secure financing for Ukraine for 2026-2027, but fell short of endorsing the European Commission’s more ambitious proposal to fund Kyiv through revenues linked to frozen Russian sovereign assets. EUalive’s partner European Pravda took a deeper look.

Instead of the so-called “reparations loan” initially floated by the Commission, the European Council opted for a €90 billion concessional loan to Ukraine, financed through EU borrowing on capital markets and backed by the Union’s budgetary reserves. While the decision guarantees funding for Kyiv over the next two years, it will do so largely at the expense of European taxpayers rather than Russia.

The outcome highlights the persistent political divisions inside the EU over how far the bloc is willing to go in using frozen Russian assets to support Ukraine – and how difficult full agreement on that issue remains.

From frozen assets to European borrowing

The idea of using Russian sovereign assets to support Ukraine has been on the table since the first days of Russia’s full-scale invasion. Kyiv has consistently called for their full confiscation, while the EU and its partners have cited legal, economic and financial risks, including sovereign immunity and concerns over setting a global precedent.

Over time, legal experts identified potential avenues for using the assets, including through international countermeasures. Yet scepticism persisted among several EU member states, making clear that the obstacle was political rather than technical.

Some opposition came from countries with openly pro-Russian positions, such as Hungary and, to a degree, Slovakia. But resistance was not limited to them. For other member states, the issue was primarily financial.

The bulk of frozen Russian assets – around €185 billion – is held at the Belgium-based clearing house Euroclear. While frozen, the assets generate income through investment in securities. Under EU law, the profits from those investments do not belong to Russia. According to Reuters estimates, Euroclear has accumulated around €176 billion in cash from frozen Russian assets, with a further €9 billion expected to mature in 2026-2027.

This has made Belgium the most vocal opponent of any move that could jeopardise those funds.

EU pivots to plan B: joint borrowing for Ukraine, shelving frozen Russian assets plan

The EU’s incremental approach

In February 2024, the EU agreed to use part of the profits generated by frozen Russian assets, without touching the principal – to support Ukraine. This later evolved into the €45 billion Extraordinary Revenue Acceleration (ERA) loan agreed with the G7.

Under that mechanism, G7 countries provided Ukraine with funds from their national budgets, secured against future revenues from frozen Russian assets held in EU depositories. The EU’s share was financed directly from those revenues, but only from profits generated after February 2024, when the Council adopted the relevant decision.

By the end of October, €25.3 billion of the €45 billion promised under the ERA scheme had already been disbursed.

The proposed “reparations loan” followed a similar logic but with a crucial difference: instead of relying on national budgets, it would have been financed entirely from revenues generated by frozen Russian assets. Those revenues would serve as collateral against future reparations that Russia would be expected to pay after the war.

The proposal aimed to reduce the burden on European taxpayers at a time when political support for financing Ukraine is weakening across the West, including in Europe.

Legal safeguards, political resistance

To prevent any risk of the assets being returned to Russia, the Commission proposed – and the Council adopted – legislative changes banning any release of the Russian central bank’s frozen assets. Crucially, the EU used qualified majority voting to adopt the measure, bypassing unanimity and overriding opposition from Hungary and Slovakia.

EU moves to freeze Russian assets indefinitely as Moscow sues Euroclear

This move removed the need for unanimous renewal of sanctions every six months and eliminated the risk that pro-Kremlin governments could block extensions that would lead to the assets being unfrozen.

The safeguards were designed in part to reassure Belgium and other holders of frozen assets that they would not be liable for compensating Russia should sanctions lapse.

Additional guarantees were also included to protect member states, financial institutions and companies from potential retaliatory measures by Russia, including the expropriation of European assets.

Despite these assurances, Belgian Prime Minister Alexander Bart De Wever refused to back the reparations loan.

A debate on hold

The failure to secure agreement underscores how sensitive the issue remains. Even using revenues generated by Russian assets — rather than the assets themselves — proved too risky for some member states. As a result, the prospect of confiscating the principal now appears more distant than ever.

At the same time, there is no intention to return the assets to Russia. Instead, the debate has been effectively paused, with EU leaders signalling that the issue will be revisited later.

We hope that the next round of talks on this topic will be more successful.

After all, how much longer will the EU be willing to pay Russia’s bills for the war in Ukraine, while keeping the aggressor’s money and refusing to use it?

The original article by Natalia Sichevlyuk in Ukrainian can be found here.

Caption: Ukrainians hold placards during a protest demanding the use of the frozen Russian assets, on the sidelines of the Economic and Financial Affairs Council (ECOFIN) meeting in Brussels, Belgium, 12 December 2025.