As the war in Ukraine drags into its fourth year, a fierce debate has erupted among European leaders over the fate of nearly €300 billion in Russian central bank assets frozen across Western financial institutions. At the heart of this standoff is Belgium, whose capital Brussels hosts Euroclear—the securities depository holding the lion’s share of these frozen funds. With Ukraine’s financial needs mounting and political divisions deepening, the question of how, or even whether, these assets should be used to support Kyiv has become a defining test for European unity and legal ingenuity.
Calls for bolder action reached a new pitch on October 2, 2025, when former Ukrainian Prime Minister Arseniy Yatsenyuk appeared on CNN, urging the immediate confiscation and transfer of all frozen Russian assets to Ukraine. “Russia has violated international law. Russia has committed an act of aggression. Russia is committing crimes against humanity. And there is only one way to make Russia accountable,” Yatsenyuk declared, as reported by CNN and echoed by Euromaidan Press. His impassioned plea came as European leaders met in Copenhagen for an informal summit, hoping to hammer out a consensus on a more cautious, legally palatable plan.
That plan, crafted by the European Commission, stops short of outright confiscation. Instead, it proposes using up to €140 billion of the frozen assets as collateral for a massive loan to Ukraine—what’s being called a “Reparations Loan.” Under this scheme, Ukraine would only be required to repay the loan if and when Russia pays war reparations in the future. The Commission’s proposal, circulated to EU ambassadors, insists “this whole operation would not touch the sovereign assets of Russia” directly, seeking to sidestep the thorny issue of violating international law by not technically seizing the funds.
But for Belgium, which physically holds €183 billion of the assets in Euroclear’s Brussels accounts, the distinction between collateralization and confiscation feels more semantic than substantive. Belgian Prime Minister Bart De Wever, at the Copenhagen summit, was blunt: “If I take your money and I use it, I think you will say that’s a confiscation.” He warned that Belgium, as the host of Euroclear, faces unique legal and financial risks. If Russia were to demand its money back, Belgium could be targeted with arbitration claims in international courts. There’s also a hefty financial incentive at play: Euroclear’s earnings from the frozen funds generate about €1.3 billion in annual corporate tax for Belgium, most of which is already earmarked for aid to Ukraine. Losing this revenue would be a blow to Belgian coffers.
De Wever’s message to fellow EU leaders was clear: “It’s absolutely clear that Belgium cannot be the only member state carrying the risk. I would like to know before we go forward—who is going to embark on that boat with me?” As reported by Anadolu Agency, he demanded “the highest level of legal certainty and solidarity,” warning that “there is no such thing as free money. There are always consequences.” He even used a vivid analogy: “If you put the chicken on the table and eat it, you lose the golden egg,” referring to the risk of sacrificing long-term financial stability for a one-time windfall.
These concerns are not Belgium’s alone. France and Luxembourg voiced their own legal worries at the Copenhagen summit, according to Financial Times. The European Central Bank has also warned that seizing or even using Russian assets could undermine the euro’s status as a global reserve currency, potentially spooking other central banks and raising borrowing costs for EU countries. The United States, meanwhile, has demanded ironclad guarantees that any loans to Ukraine can be repaid from these assets, and that the funds remain frozen until Moscow pays reparations in full.
Despite these hurdles, political momentum has been building. German Chancellor Friedrich Merz has become a vocal proponent of using the assets to finance Ukraine’s defense. Finland, Sweden, Estonia, and Denmark have signaled support for the Commission’s plan, while French President Emmanuel Macron has offered cautious backing, provided legal safeguards are in place. The European Commission’s Ursula von der Leyen has sought to reassure Belgium and other skeptics, stating, “the risks have to be put on broader shoulders,” and proposing a “coalition of the willing” to share liability proportionally.
The technical details of the plan are complex. As outlined by Reuters, the EU would move the frozen cash from Euroclear into a Special Purpose Vehicle (SPV) owned by EU or G7 governments. In return, Euroclear would receive zero-coupon bonds from the Commission, backed by the SPV. The EU would then use the cash to issue the reparations loan to Ukraine, with repayment contingent on future Russian reparations. The first tranche of funds would repay the €45 billion ($50 billion) G7 loan agreed with Ukraine in 2024, leaving about €140 billion available for the new loan. The precise amount would depend on an International Monetary Fund assessment of Ukraine’s needs in 2026 and 2027. Finland and Sweden estimate Kyiv will face a shortfall of around €130 billion during that period.
But consensus remains elusive. At the Copenhagen summit, EU leaders failed to reach agreement, with Belgium’s opposition and legal doubts from France and Luxembourg stalling progress, as reported by Financial Times. While the principle of supporting Ukraine has broad backing, the specifics of the loan mechanism, risk-sharing, and legal protections require further study. Experts caution that ironing out these issues will demand prolonged negotiations, robust oversight, and a commitment to transparency to protect European taxpayers.
Meanwhile, Ukraine’s financial pressures are acute. According to Ukrainian military intelligence chief Kyrylo Budanov, Ukraine spends $172 million per day on the war, amounting to 31% of its GDP. Russia, by comparison, spends nearly $1 billion daily, with 41% of its budget devoted to defense. Yatsenyuk, in his CNN interview, also called for additional military support, including Taurus missiles from Germany and Tomahawk cruise missiles from the United States. He noted that the Trump administration is “weighing deliveries” of long-range American weapons—though, as Reuters notes, such transfers remain unlikely for now.
For its part, Moscow has denounced the European plan as “pure theft” and “outright theft,” threatening legal action and strong retaliation. Kremlin spokesperson Dmitry Peskov warned that anyone misappropriating Russian assets “will be prosecuted in one way or another.” The European Central Bank has echoed concerns about potential blowback, warning that unilateral EU action could destabilize financial markets and erode trust in euro-denominated assets.
With no final decision reached, the proposal is expected to return to the EU summit in late October. The outcome will shape not only Ukraine’s financial lifeline but also the credibility of Europe’s sanctions regime and the future of international financial norms. As the debate rages on, the fate of Russia’s frozen billions—and the unity of Europe—hangs in the balance.
