EU Plan to Use Frozen Russian Assets to Support Ukraine Budget
The European Union is planning to use frozen Russian assets held in the EU, primarily via Euroclear, to back a reparations loan of about €90 billion for Ukraine. This loan aims to help cover a projected two-year budget deficit of roughly €135.7 billion in Ukraine. Russia has approximately €210 billion of assets frozen in the EU, with €185 billion held by Euroclear. Moscow has responded by suing Euroclear in a Moscow court.
The EU's proposals seek to immobilise Russia's central bank assets held in Europe indefinitely under Article 122, avoiding the need for recurring renewal votes. However, Belgium has expressed concerns about legal risks and potential liability related to the €185 billion of frozen assets. It fears that Euroclear could suffer losses and has demanded strong guarantees before accepting this plan. Belgian Prime Minister Bart De Wever has emphasized the need for rational and justified conditions and has not ruled out legal action if the plan imposes significant risks on Belgium.
There are two main EU funding options under consideration: one is to raise about €90 billion on capital markets backed by the EU budget, which is Belgium's preferred option but would require a unanimous vote within the EU. The other, which is the current plan, is to loan Ukraine money from the frozen Russian assets.
In 2024, windfall profits from these frozen assets amounting to €3.7 billion were paid to Ukraine. The legal use of interest is considered permissible since the assets are under sanctions and are not regarded as Russia's sovereign property. Ukrainian President Volodymyr Zelensky has expressed support for using the frozen assets to aid Ukraine's rebuilding efforts.
The United States is actively involved, with discussions ongoing about a reconstruction fund. A past draft plan included using about $100 billion of frozen assets with a 50/50 profit split between the US and Europe.
