How the EU shifted on the use of frozen Russian money and why now
Ukraine has reported a $27 billion shortfall in its 2026 defence budget and is asking the EU for assistance.
As a result, Brussels has once again turned its attention to frozen Russian assets, whose use Ukraine has long advocated.
A new legal framework for using these assets is now under consideration. It would involve changing the jurisdiction of Russian funds from Belgian to European jurisdiction.
However, progress so far has been limited to consultations. No systematic work is currently underway to prepare a new plan for using Russia’s frozen assets.
Read more about the still non-public aspects of this new idea in the article by Tetiana Vysotska and Sergiy Sydorenko: Russian money is being put on the path to unfreezing: will Ukraine receive Russian assets and what is Brussels proposing?
In December 2025, the European Union appeared to put the discussion about using frozen Russian assets to finance Ukraine on hold for the foreseeable future. Following difficult overnight negotiations at a Brussels summit, EU leaders rejected the European Commission’s proposal to provide Ukraine with a reparations loan linked to frozen Russian assets.
Instead, the European Council agreed on another option for financing Ukraine.
The EU decided to borrow €90 billion on financial markets, backed by the common EU budget, in order to provide Ukraine with assistance in 2026-2027. Although this financing is formally structured as a loan, its terms stipulate that Kyiv will have to repay the money only after Russia pays post-war reparations, which, in all likelihood, means never.
A little more than eight months later, the issue of using Russian assets has seriously returned to the agenda.
A month ago, Kyiv began actively raising the issue again, including in discussions with Belgium, which blocked the use of Russian funds last year.
Support within the EU followed. Sweden, the Netherlands, Spain and Poland jointly called for work to resume on using frozen Russian sovereign assets and even made their joint letter public.
However, the decisive factor was not the letter from these four countries or the numerous statements by Ukraine’s friends.
The main impetus came from information about a significant shortage of funding for the war.
Around €210 billion in assets belonging to the Central Bank of Russia are frozen within the European Union. The overwhelming majority of them (approximately €180 billion) are held by Euroclear, the Brussels-based securities depository.
Belgium sees a fundamental unfairness in the fact that the main legal and financial risk is concentrated on its territory.
One of the alternative approaches to using Russia's frozen assets to support Ukraine, currently being discussed within European expert circles, is to change not only how Russian money is used, but also where it is held and which institution is responsible for its custody.
If a new EU structure or banking institution replaces Euroclear as custodian, legal responsibility, along with the Russian funds, could shift to the pan-European level. In that case, it would be the EU, not Belgium, that would have to respond to lawsuits or demands for the return of funds, which would broadly address the concerns the Belgian government has cited in its objections to the reparations loan.
In theory, this addresses Belgium’s central concern and reduces the need to collect separate national guarantees covering the entire amount, which, again, would be unrealistic.
However, despite Kyiv’s statements that concrete proposals exist, the EU believes that this is currently only a concept rather than a ready-made plan.
EU officials believe that greater clarity about the funding shortfall is needed before practical discussions can begin. Therefore, the first step must be an assessment of Ukraine’s financial needs by the European Commission and the IMF.
Nevertheless, a genuinely tectonic shift has taken place in Brussels. In behind-the-scenes discussions, the use of Russian assets to finance Ukraine is no longer considered an issue that was permanently closed by the "December compromise".