What's holding EU back from deciding on frozen Russian assets

On 23 October, the European Council meeting in Brussels put a key question on its agenda: how to finance Ukraine in 2026-2027 and whether frozen Russian assets could be used for that purpose.

There is still no final decision on the "reparations loan," even though political will among EU member states now exists – something unimaginable a year ago.

The main obstacle remains the absence of an "ideal" legal solution.

Read more about the search for a solution for Ukraine in the article by Serhiy Verlanov of the Dnistryanskyi Center (head of the state tax service of Ukraine in 2019–2020): Conditions for helping Ukraine: under what circumstances will EU use Russian assets?

Among the most important outcomes of this European Council meeting is the instruction to the European Commission to present, by December, concrete options for financial support to Ukraine for 2026–2027.

This would be a long-term architecture to replace the current Ukraine Facility and add a defence component.

In its final conclusions of the summit, the European Council reaffirmed a long-standing formula: frozen Russian assets will remain under EU control until Russia compensates for the damage it has caused.

Belgium, where the Euroclear depository holds the bulk of Russia’s frozen assets (over €190 billion), is seeking guarantees that, in the event of lawsuits or Russian legal aggression, it will not be left de jure on its own.

Brussels, and ultimately the entire eurozone, cannot allow an international depository with trillions in client funds, including those of many leading economies, to come under sustained legal attack. Hence Belgium’s insistence on a common system of guarantees shared by all EU member states.

Moreover, the European Central Bank supports this approach: any decision must comply with international law and must not undermine confidence in the euro.

In short, Brussels has entered a legal pause – not issued a political refusal.

There are also ongoing discussions between Kyiv and Brussels over the oversight of loan spending.

Accordingly, the December decision should enshrine a formula in which Ukraine’s flexibility coexists with European interests.

By the December summit, the European Commission should present concrete, legally sound options to turn the idea of a reparations loan into an operational mechanism.

This is not only about technical design but about a coherent financial architecture: how to distribute risk across all EU member states without eroding investor confidence and how to ensure that the use of frozen Russian assets is both lawful and effective.

For Ukraine, this period will be a test of diplomatic and institutional maturity.

Kyiv will have to work on several tracks at once.

Yes, there must be a clear, methodical development of the legal framework for the reparations loan with the European Commission. Work with the IMF should focus on the macroeconomic logic of the new programme, particularly on devaluation, inflation and the exchange rate. In parallel, Kyiv must engage the United States on G7 participation in the financial architecture of the reparations loan.

At the same time, the government needs a "plan B": a standby financing line that ensures stability if the "big loan" is again delayed in procedural labyrinths.

These contingencies could include bilateral grants and loans, expansion of existing programmes, especially the ERA Loan or a substantial increase in financing under the new IMF programme.

If, by then, the EU can translate political intent into a concrete, legally formalised financial instrument, and Ukraine can align its needs with its parameters, the European community will have built a solid, long-term foundation of strength for victory.