EU Moves to Utilize Frozen Russian Assets for Ukraine Reconstruction

Thu Oct 23 2025 23:15:19 GMT+0300 (Eastern European Summer Time)

In a groundbreaking proposal, European leaders are set to endorse a plan to redirect frozen Russian assets, estimated at €140 billion, to aid Ukraine amidst escalating tensions with Russia. This 'reparations loan' aims to facilitate Ukraine's recovery while navigating complex legal and political challenges.

European Union leaders are preparing to endorse an innovative yet controversial plan that would use frozen Russian state assets to support Ukraine's reconstruction and recovery efforts. This plan, termed a 'reparations loan,' involves the use of around €140 billion currently held in Euroclear, a financial institution in Belgium. Concerns about legal ramifications and potential financial instability persist among member states, while reactions from Russia have been vehemently negative, warning of severe consequences. The plan also raises questions about the accountability and legal frameworks surrounding the use and repayment of these funds.

European leaders aim to endorse controversial plans to use Russian frozen assets to support Ukraine at a meeting in Brussels on Thursday.

The unprecedented proposal for what the EU has dubbed a 'reparations loan' would see Kyiv receive €140bn (£121bn) worth of frozen Russian state assets currently held by Euroclear, a Belgium-based financial institution.

The plan has been months in the making, partly due to the legal complexities surrounding it, as well as concerns from member states about upsetting global financial stability.

Belgium in particular has been reluctant to back using the frozen assets, as it is nervous about having to shoulder any potential consequences should Russia legally challenge Euroclear.

Russia has reacted angrily to any suggestions that the EU could use its money. Any confiscatory initiatives from Brussels will inevitably result in a painful response, Russian Foreign Ministry spokeswoman Maria Zakharova said.

How would a reparations loan work?

For the EU, the problem of how to continue to support Kyiv's struggle against Russian aggression has become more urgent since US support for Ukraine has dwindled.

As of July, EU member states have provided about €177.5bn (£154bn) in financial support for Ukraine. But as Russia's full-scale war approaches its fifth year, the need for further financial assistance remains critical.

The cost of Ukraine's reconstruction is estimated by the UN and World Bank to be well over $486bn (£365bn; €420bn), with a significant portion of previously frozen Russian investments available to help fund this effort.

The EU has been using the interest from frozen Russian assets for Ukraine's defense since spring 2024, amounting to about €3bn per year.

The plan being discussed would redirect the original frozen funds directly as a zero-interest 'reparations loan' to Kyiv.

Can EU get around legal issues over Russia's cash?

International law complicates the situation, as sovereign assets cannot be outright confiscated. To navigate this, the EU could potentially 'borrow' from Russia's holdings at Euroclear and replace them with an IOU, minimizing risk for the financial institution.

Belgium remains skeptical, expressing a desire for assurances that all member states will share the associated risks.

Despite vehement opposition from Russia, if the EU's leaders approve this strategy, the European Commission will draft a formal proposal for the reparations loan.

What are the issues?

A key concern is that the plan predicates on Ukraine successfully winning the conflict and obtaining reparations from Russia afterward, a scenario that is far from assured.

Potential backlash from Russia against European businesses adds another layer of complexity, especially with leaders in countries like Hungary expressing reservations.

Who backs the plan, and who doesn't?

Support for the reparations loan exists among Poland and Nordic countries, with some leaders praising its ingenuity. However, skepticism remains among nations with closer ties to Moscow, raising potential hurdles to unanimous approval within the EU. The disparity in opinion surrounding how Ukraine would use the funds also contributes to ongoing debates on the proposal.