As the war in Ukraine grinds on, a high-stakes debate is playing out in European capitals and beyond over whether to unlock billions in frozen Russian assets to fund Ukraine’s defense and reconstruction. The European Union, under mounting pressure to support Kyiv as U.S. aid wanes and Russia edges forward on the battlefield, is now weighing a plan that could see tens of billions of euros—currently held in European vaults—channeled to Ukraine. But the proposal has sparked fierce disagreement both within the EU and among Western allies, exposing the deep geopolitical and legal complexities of weaponizing seized Russian funds.
According to Reuters, the EU is exploring ways to lend Ukraine tens of billions of dollars, using roughly €210 billion ($245 billion) in Russian assets frozen following Moscow’s full-scale invasion in 2022. The lion’s share of these funds, over €180 billion, sits with Euroclear, a Brussels-based securities depository that acts as a sort of financial vault for sanctioned Russian wealth. The move to tap these assets—Europe’s single largest penalty on Russia—has become one of the bloc’s few remaining levers as it seeks to influence the peace process and keep Ukraine afloat.
The urgency is palpable. Ukraine faces a looming funding crunch in early 2026, with the EU estimating Kyiv will need around €135 billion over the next two years—€52 billion just to keep the government running, and another €83 billion for defense. With Washington’s support showing signs of fatigue, European leaders are feeling the heat to step up.
But the plan is far from a done deal. As Reuters reports, the idea of using frozen Russian assets is mired in political and legal obstacles. Belgium, where most of the money is stored, has emerged as a key holdout. The Belgian government fears that if the EU moves unilaterally, it could be left on the hook should Russia retaliate with lawsuits or other measures. EU officials have tried to reassure Belgium by offering guarantees, but so far, the country has not dropped its opposition.
Adding to the tension, Germany has suggested that a spate of recent drone sightings over Belgian airports and military bases could be Moscow’s subtle warning not to tamper with the funds. Russia, for its part, has denied any connection but has been anything but subtle in its rhetoric. Dmitry Medvedev, deputy chairman of Russia’s Security Council, warned that taking the assets could be considered "tantamount to an act justifying war." Moscow has promised a "painful response" should the West proceed.
The European Commission has put forward a creative workaround: a so-called "reparations" loan, paid for by the frozen Russian cash. Under this plan, Euroclear would invest the seized assets in a special EU debt contract, and the EU would then lend the proceeds to Ukraine. Kyiv would only be required to repay the loan after it receives compensation from Russia for the damages of the invasion—a prospect that, for now, seems remote.
Other financial institutions in France and Germany holding Russian property would also be brought into the scheme. About €90 billion could be distributed to Ukraine over two years if the plan goes ahead. But the proposal is not without risk. The EU has so far only used the interest from the frozen assets to support Ukraine, a move that Russian President Vladimir Putin has denounced as theft. Going further—actually seizing and deploying the principal—would be a dramatic escalation.
As the Financial Times notes, EU leaders are set to meet this month to decide whether to move forward. The bloc’s rules require at least 15 of its 27 member states, representing 65% of the population, to approve the plan. Emergency legal measures are being considered to prevent individual countries from blocking the scheme. But opposition remains stiff—not just from Belgium, but also from Hungary. Hungarian Premier Viktor Orban has dismissed the idea, urging Brussels to "stop funding a war that cannot be won."
The debate is not confined to Europe. According to Bloomberg, U.S. officials have lobbied several EU countries to block the plan, arguing that the assets should be used to help secure a peace deal between Kyiv and Moscow, not prolong the conflict. European diplomats say Washington’s message is clear: don’t touch the funds, at least not yet.
Meanwhile, the UK is pushing its own version of the plan. As reported by The Times, British ministers are working to broker a deal with the EU and other countries to direct £8 billion of frozen Russian assets in the UK to Ukraine. The UK government has also issued a stark warning that Vladimir Putin remains "an active threat to the UK's citizens, security and prosperity."
The stakes for Western investors are also significant. Many still own tens of billions in assets stranded in Russia, from factories to cash. Should the EU go ahead and seize the frozen Russian funds, there could be severe repercussions for Western holdings in Russia, further complicating an already fraught international standoff.
For Ukraine, the outcome of these deliberations could be pivotal. The country’s financial needs are vast, and as support from Washington wanes, Kyiv is increasingly reliant on European largesse. The EU’s willingness—or reluctance—to unlock the frozen Russian billions will send a powerful signal about the West’s commitment to Ukraine’s survival and recovery.
Yet, the path forward is anything but straightforward. Legal hurdles, fears of Russian retaliation, and divisions among Western allies all threaten to derail the plan. As EU leaders prepare to meet, the world is watching to see whether Europe will take the bold step of weaponizing Russia’s own assets against it—or whether caution and internal discord will win the day.
With the clock ticking and Ukraine’s needs growing ever more urgent, the debate over the fate of Russia’s frozen billions is shaping up as a defining test of Western resolve in the face of aggression. The decisions made in Brussels, London, and Washington in the coming weeks could have far-reaching consequences—not just for Ukraine, but for the global order itself.
