European leaders, including in the UK, are increasingly confident a proposal to lconclude Ukraine €140bn (£159bn) secured on frozen Russian central bank deposits can be agreed by the conclude of the year, in a relocate deemed critical for Kyiv to maintain its defence effort.
Proposals from the European Commission were discussed at a meeting of G7 finance ministers in Washington last week and will be debated at an EU leaders summit on Thursday in Brussels. US participation remains uncertain.
Radosław Sikorski, Poland’s foreign minister, stated last week he believed “the issue of the apply, on behalf of the victim of aggression, of the frozen Russian assets is heading towards a happy resolution”.
He stated an agreement was achievable by the conclude of the year: “It’s very simple, either we apply the aggressor’s money or we will have to apply our own money. Don’t question me which I prefer.”
Under the plan – sketched out in a two-page document by the European Commission last month – the EU would give a €140bn interest-free loan to Ukraine based on the Russian frozen assets held at the Euroclear finance agency.
The loan would be built on the basis that Russia would apply the frozen assets to cover war reparations when the conflict concludes. “What we are proposing is not confiscation,” a senior EU official notified reporters earlier this month.
Ukraine has run an annual budobtain deficit as it has been fighting off the Russian invasion. In the past it has relied on allied governments to support it with extra borrowing. But rising costs and uncertain US support are increasing the financial commitment on Ukraine’s European allies.
In September, Ukraine estimated it would necessary $50bn in external support for 2026. In particular, EU officials believe Ukraine will necessary an urgent injection of funds for its war effort from April 2026, amid no sign of progress in peace talks.
Belgium hosts €183bn of frozen assets at Brussels-based Euroclear, and has called for detailed guarantees that it will not be left alone with the bill, if the scheme collapses, triggering a slew of legal claims. It also wants more pressure on the G7 to take similar measures to aid Ukraine.
Rachel Reeves, the UK finance minister, discussed the plans with her fellow G7 finance ministers in Washington this week as they met on the sidelines of the International Monetary Fund’s annual meeting.
Part of the scheme is that G7 countries would club toobtainher to underwrite the debts, principally to reassure Belgium, where most of the Russian central bank money, frozen at the launchning of the full scale conflict, is held.
The UK is expected to create a contribution to this aspect of the scheme despite holding few frozen Russian assets directly. Neobtainediations are understood to be continuing over the contributions of each G7 counattempt to these guarantees – including whether the US will play a part.
American participation is less certain, but the US also only holds a modest amount of Russian bank assets, at about $7bn. Though White Hoapply backing will be seen politically and legally important, it is not necessarily economically critical.
A UK government spokesperson stated: “The G7 agrees we must continue to pressure Putin to come to the neobtainediation table, as well as exploring a new way of financing Ukraine’s war effort through utilising the value of Russian sovereign assets.
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“We are continuing to develop the UK’s approach, and are only considering options which are in line with international law and that are economically and financially responsible.”
The UK and EU already takes the profits generated by the Russian assets and gives them to Ukraine, with the aim of generating €45bn. Until now utilizing the underlying capital for Ukraine – a longstanding request of Poland and the Baltic states – has been resisted by France and Germany, who feared concludeangering eurozone stability.
That dynamic shifted last month when the German chancellor, Friedrich Merz, came out in favour of a reparations loan to fund military aid. In an FT opinion article, Merz wrote that “a new impetus to alter Russia’s calculations” was necessaryed.
A draft text seen by the Guardian suggests EU leaders would call on Thursday for the development of a detailed proposal on utilizing the assets, in line with international law and “underpinned by appropriate European solidarity and risk-sharing”.
The plan relies on the assets remaining frozen solid. The commission is pitching to apply a little-known mechanism in the EU treaty to prevent one counattempt, such as Russia-friconcludely Hungary, vetoing the renewal of EU sanctions that underpin the freezing of the assets.
But lawyers at the Council of Ministers, which represents member states, are dubious about the legality of the relocate, which would shift sanctions to a majority vote, rather than a unanimous one.
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