EU leaders delay decision on using frozen Russian funds to aid Ukraine

Leaders across the European Union have agreed to help Ukraine fund its fight against Russia’s invasion, but stopped short of approving a plan that would draw from frozen Russian assets to do so, after Belgium raised objections.

EU leaders met in Brussels on Thursday to discuss Ukraine’s “pressing financial needs” for the next two years. Many leaders had hoped the talks would clear the way for a so-called “reparation loan”, which would use frozen Russian assets held by the Belgian financial institution Euroclear to fund a loan of 140 billion euros ($163.3bn) for Ukraine.

The EU froze about 200 billion euros ($232.4bn) of Russian central bank assets after the country launched its full-scale invasion of Ukraine in 2022. In order to use the assets to fund Ukraine’s war effort, the European Commission, the EU’s executive, has floated a complex financial manoeuvre that involves the EU borrowing matured funds from Euroclear.

That money would then, in turn, be loaned to Ukraine, on the understanding that Kyiv would only repay the loan if Russia pays reparations.

The scheme would be “fully guaranteed” by the EU’s 27 member states – who would have to ensure repayment themselves to Euroclear if they eventually decided Russia could reclaim the assets without paying reparations. Belgium, the home of Euroclear, objected to this plan on Thursday, with Prime Minister Bart De Wever calling its legality into question.

Russia has described the idea as an illegal seizure of property and warned of retaliation.

Following Thursday’s political wrangling, a text approved by all the leaders – except Hungary’s Prime Minister Viktor Orban – was watered down from previous drafts to call for “options for financial support based on an assessment of Ukraine’s financing needs.” Those options will be presented to European leaders at their next summit in December.

“Russia’s assets should remain immobilised until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by its war,” the declaration added.

Earlier, Ukrainian President Volodymyr Zelenskyy, a guest at the summit, had urged a quick passage of the plan for the loan.