European leaders are facing a momentous decision that could reshape the financial and geopolitical landscape of the continent—and perhaps the world. At the heart of the debate is a bold new proposal: using hundreds of billions of euros in frozen Russian assets, held mainly in Belgium, to provide Ukraine with a massive interest-free loan. The plan, discussed at a high-stakes summit in Copenhagen on October 1-2, 2025, has triggered fierce debate across the European Union, with legal, political, and financial risks looming large.
Since Russia’s full-scale invasion of Ukraine in February 2022, the EU has wielded a powerful economic lever: the freezing of Russian state assets, estimated at up to $300 billion. According to the Brookings Institution, Euroclear—a Brussels-based central securities depository—manages about $200 billion of these, accounting for roughly 90% of the frozen reserves in the EU. France holds most of the remainder, while the United States has immobilized about $5-6 billion. These funds, once a symbol of Moscow’s global integration, now sit in legal limbo, their fate the subject of intense international wrangling.
The European Commission’s latest proposal, championed by President Ursula von der Leyen, would see up to 140 billion euros ($165 billion) in loans extended to Ukraine, backed by the profits generated from these frozen assets. Repayment would only be required if and when Russia pays reparations for the destruction wrought by its invasion. "We are not confiscating the assets, but we are taking the cash balances for a loan to Ukraine," von der Leyen told reporters in Copenhagen, as quoted by The Associated Press. "Ukraine has to pay back this loan if Russia pays reparations. Russia is the perpetrator. It has caused the damage and must be held accountable."
The logic is simple, but the mechanics are anything but. The plan does not involve outright confiscation—a red line for many EU capitals, wary of the legal and financial fallout. Instead, it uses the interest and investment returns (the so-called "extraordinary revenue") generated by the frozen assets as collateral. Euroclear has already paid out $2 billion to Ukraine in July 2024 and another similar amount in March 2025, drawn from these profits. In June 2024, the G7 and EU jointly agreed to a $50 billion loan for Ukraine, to be repaid with interest from the immobilized Russian funds. But these sums pale in comparison to Ukraine’s projected budget and defense needs for 2026 and 2027, which the European Commission estimates at around 130 billion euros ($153 billion).
As the war grinds into its fourth year, Europe’s resolve is being tested. U.S. support has dwindled under President Donald Trump, who has halted most financial aid and sharply limited weapons deliveries. According to The Volokh Conspiracy, the U.S. Congress passed the REPO Act in 2024, authorizing the president to seize $6 billion in Russian assets, but neither the Biden nor Trump administrations have acted on it. The burden, then, falls squarely on European shoulders—a reality that has forced the EU to consider ever more creative, and risky, financial engineering.
The proposed loan scheme is not without its champions. Denmark, Finland, and Sweden have voiced strong support, calling it "a responsible and necessary step" and arguing that investing in Ukraine is an investment in European security. In a joint letter, the Nordic nations wrote, "It is key that the loan to Ukraine is only to be repaid once Ukraine receives war reparations from Russia." Danish Prime Minister Mette Frederiksen described the plan as "a good way forward," while acknowledging that "some legal questions have to be asked."
But opposition is fierce—and nowhere more so than in Belgium, where the bulk of the Russian assets are held. Belgian Prime Minister Bart De Wever has emerged as a leading skeptic, warning that using the funds is "entering uncharted waters." De Wever revealed that Moscow had personally warned him: "Moscow has already warned me; if you come for our money, you will feel the consequences for eternity." He quipped, "I think this is Russian for we will send you to eternity," underscoring the seriousness of the threats. The director of Euroclear is currently under protection due to these warnings.
De Wever’s concerns are not limited to Russian retaliation. He pointed to the risk that Western assets in Russia—factories, investments, and more—could be seized in response. Russian Finance Minister Anton Siluanov has claimed that Russia has already frozen an equivalent amount of Western assets, though analysts like Timothy Ash of Chatham House argue the true figure is much lower, perhaps one-tenth of the Russian assets frozen by the West. Still, the specter of tit-for-tat seizures hangs over the negotiations.
There is also the matter of the euro’s reputation. De Wever cautioned that if countries begin to doubt the safety of their money in the EU, the euro could suffer lasting damage. "Will Western assets in Russia be seized? Factories that are in Western hands? We don’t know," he said, according to ANP. He has demanded written guarantees from all EU leaders to share the risks, insisting that Belgium cannot bear the burden alone. Dutch caretaker Prime Minister Dick Schoof echoed this, stating, "Belgium cannot bear the risks alone, they are really far too great."
The legal hurdles are formidable. The European Central Bank has warned that outright confiscation could undermine global confidence in the euro and destabilize financial markets. Many countries in the Global South—China, Saudi Arabia, the UAE, Qatar, and India—have invested heavily in Western financial institutions. Any move that signals sovereign funds can be seized, directly or indirectly, could trigger a global panic, with investors fleeing to safer havens, potentially accelerating de-dollarization and weakening the euro’s global standing.
Russia, for its part, has responded with predictable fury. Kremlin spokesman Dmitry Peskov called the EU’s discussions "plans to illegally confiscate Russian property—in Russian, we call it theft." Moscow has threatened to prosecute individuals and countries involved and has already passed laws allowing it to seize Western assets in retaliation.
Within the EU, divisions remain. France, under President Emmanuel Macron, has expressed cautious support but insists that "when assets are frozen, we respect international law." Macron warned that any deviation could make Europe less attractive to global investors. Hungary, led by Viktor Orbán, has threatened to veto new funding measures, citing national sovereignty and opposition to sanctions on Russia. If consensus cannot be reached, some member states may proceed outside the EU framework, using national guarantees—a legally complex but increasingly likely scenario.
Despite the hurdles, European leaders appear determined to press ahead. As the Copenhagen summit wrapped up, von der Leyen voiced optimism that "Europe’s unity on Ukraine will prevail." Frederiksen summed up the stakes: "This is about Europe taking responsibility. Ukraine’s struggle is also our struggle—and our credibility as a continent depends on what we do next."
As technical and legal discussions continue, the world is watching. The outcome will not only shape the fate of Ukraine, but also redefine the rules of international finance and the future of the European project itself.
