EU Moves to Use Frozen Russian Assets and Loans to Support $105bn Aid Plan for Ukraine

The European Union has proposed a bold, unprecedented plan to channel frozen Russian state assets — alongside potential EU-backed loans — to finance a €90 billion (approximately US$105 billion) support package for Ukraine. The move reflects mounting urgency in response to Ukraine’s urgent financing needs as it continues to defend its sovereignty while also managing reconstruction, basic services, and long-term stability. The proposal has triggered intense debate within the EU and beyond, highlighting legal, political, and financial implications.

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What is the Proposal?

In early December 2025, the European Commission unveiled a plan whereby frozen Russian sovereign assets — immobilised across EU member states since the beginning of Russia’s renewed full-scale invasion of Ukraine — would be used as collateral for a “reparations loan.” Under this scheme:

Ukraine would receive roughly €90 billion over the next two years, covering “two-thirds of its financing needs.” 

The loan would rely on frozen Russian assets held in European financial institutions — notably those held by the Brussels-based depository Euroclear, which holds a large share of Russia’s frozen securities. 

Crucially, the plan does not amount to an outright confiscation — Russia would theoretically retain ownership of the assets. Instead, the EU would extend a loan to Kyiv, secured against those assets, with the idea that Ukraine would only fully repay the loan if Russia eventually pays reparations for the war. 

As a fallback, the EU could resort to a traditional borrowing mechanism — typical international market borrowing — to fund part or all of the aid if the asset-backed loan meets resistance. 

The declared rationale: the move would allow Ukraine to maintain state functions, defense, reconstruction and recovery — without further burdening EU national budgets. According to the Commission, broader use of Russian assets signals that Russia will “pay the price” of its aggression, strengthening Europe’s position at the negotiating table. 

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Why is the Plan So Controversial?

Despite the urgency, the proposal has sparked sharp disagreement and serious legal and financial concerns — particularly from some EU member states.

🇧🇪 Concerns from Belgium and Legal Risk

Belgium, which hosts Euroclear and thereby holds a large portion of the frozen Russian assets, has emerged as the most vocal critic. Its leaders warn that the plan risks exposing Belgium to open-ended legal liabilities — for instance, if Russia or Russian businesses sue European institutions for what could be deemed unlawful expropriation. 

Belgian authorities argue the scheme could destabilize confidence in European financial markets and weaken the euro if investors fear arbitrary seizures or misuse of frozen assets. 

Another concern: if Russia refuses to pay reparations — or if the war drags on indefinitely — the assumption that frozen assets can eventually be returned becomes uncertain. This raises the specter of long-term financial and geopolitical instability. 

EU Unity, Sovereignty and Treaty Constraints

Some EU member states remain skeptical: the plan effectively seeks to bypass standard procedures for foreign-policy unanimity — invoking emergency clauses to avoid vetoes from pro-Russia governments. 

Additionally, there are deep questions about whether the loan-backed-by-assets approach violates international law: critics argue it amounts to a de facto confiscation without due compensation. The proposal marks a major legal precedent. 

Should any of these legal challenges succeed, the reputational and financial fallout could be significant — Europe risks undermining not only its unity, but also its role in global finance.

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What Has Been Done So Far

This is not the first instance of the EU using frozen Russian assets to aid Ukraine:

In 2024, the EU approved a macro-financial assistance loan of up to €35 billion, to be repaid using windfall profits from frozen Russian central-bank assets. 

Brussels previously transferred €1.5 billion to Kyiv from earnings on immobilised assets, channeling funds toward Ukraine’s defense and reconstruction efforts. 

Still, those earlier transfers were modest compared to the scale of Kyiv’s new financing needs, which is why EU leaders now consider a larger-scale instrument — the reparations loan — to cover the deepening budget and war-related shortfall. 

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What’s at Stake: Pros, Cons & What It Signals

✅ What Works — Potential Benefits

Substantial funding without raising taxes or national deficits: The plan offers a way to meet Ukraine’s huge needs through existing frozen assets rather than fresh taxpayer money.

Political leverage: By using Russia’s own immobilised assets, the EU sends a clear message: aggression has a cost. This could strengthen its bargaining position in any future peace negotiations.

Financial precedent — “war reparations” model: If successful, the mechanism could provide a blueprint for reparations-based recovery financing — not just for Ukraine, but potentially for other states harmed by aggression.

⚠️ Risks and Downsides

Legal uncertainty and risk of lawsuits: If challenged in international or civil courts, the plan might backfire, costing EU states (or Euroclear) billions.

EU cohesion at stake: Member states are split. If unanimity fails or legal challenges succeed, the EU could emerge weakened, internally divided and less credible internationally.

Uncertain outcome for Ukraine: The success of the plan depends heavily on Russia paying reparations — something not guaranteed given the volatile war environment. If that doesn’t happen, Ukraine could be left with a massive debt burden or the loan may not get repaid.

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What’s Next — When Could This Be Finalized?

Proponents hope to secure member-state approval at an upcoming summit on December 18. 

If approved, legal frameworks need to be drafted, safeguards implemented, and explicit guarantees agreed upon — especially addressing Belgium’s concern about bearing disproportionate risk. 

At the same time, alternate options remain: should agreement falter, the EU may revert to traditional borrowing to meet Ukraine’s needs — though this too requires consensus and would likely increase the EU’s collective debt burden. 

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Conclusion

The EU’s proposed €90 billion / US$105 billion aid package for Ukraine — backed by frozen Russian assets and structured as a reparations loan — represents a landmark shift in how war-related financing may be handled in Europe. It blends political symbolism, financial innovation, and moral reckoning.

However, the path forward remains fraught: legal objections, internal EU divisions, market risks, and the uncertainty over reparations make the proposal controversial and delicate.

As the December summit approaches, all eyes will be on whether Europeans can turn financial freeze into strategic support — and whether that sets a new precedent for conflict-related reparations.