EU Proposal to Fund Ukraine with Frozen Russian Assets Faces Mounting Concerns
Brussels – A European Commission proposal to utilize frozen Russian assets to provide a €140 billion loan to Ukraine is encountering resistance from several EU member states, who fear the plan skirts international law and could damage the credibility of European financial markets. While commission President Ursula von der Leyen insists “we don’t confiscate any assets,” the proposed mechanism – where Russia would repay the loan only after receiving reparations for damages caused in Ukraine - is viewed by some as de facto confiscation.
The plan hinges on Euroclear, the Belgium-based clearinghouse holding the majority of the frozen Russian funds, transferring money to Russia once reparations are paid. However, concerns are rising over what happens if Russia fails to pay. Luxembourg Prime Minister Luc Frieden questioned the legality,asking,”What if Russia doesn’t pay?” and French President Emmanuel Macron acknowledged the proposal is ”promising” but requires further exploration.
Beyond the legal ambiguities, the proposal faces practical hurdles. Member states are debating how to divide potential financial risks, with a preference for utilizing the EU budget as a guarantee, but no consensus yet reached. Furthermore, EU sanctions – and therefore access to the frozen assets – require unanimous renewal every six months, leaving the plan vulnerable to a veto from any member state, a scenario that previously stalled efforts to streamline the sanctions process, according to reporting by Euronews.
