EU leaders prepare to take unprecedented steps to help Ukraine at a high-stakes summit

EU Leaders Contemplate Unprecedented Move to Fund Ukraine with Frozen Russian Assets

European Union leaders are preparing for a high-stakes summit beginning Thursday that could break new ground in how the bloc handles frozen foreign assets. The primary agenda item: deciding whether to use billions of euros in Russian assets held in Europe to fund Ukraine’s urgent economic and military needs over the next two years.

With Ukraine teetering on the edge of bankruptcy, the pressure to act is immense. The International Monetary Fund estimates Ukraine will require approximately €137 billion ($160 billion) in 2026 and 2027, and this funding must be secured by spring. European Commission President Ursula von der Leyen emphasized the urgency during an address to EU lawmakers on Wednesday.

“One thing is very, very clear,” von der Leyen stated. “We have to take the decision to fund Ukraine for the next two years in this European Council.”

European Council President António Costa has signaled his determination to reach an agreement, vowing to keep leaders negotiating for days if necessary.

The European Commission’s primary proposal involves using a portion of the €210 billion ($246 billion) in frozen Russian assets to underwrite a €90 billion ($105 billion) “reparations loan” to Ukraine. Under this plan, the United Kingdom, Canada, and Norway would contribute additional funding to meet Ukraine’s financial needs.

This approach, however, has generated significant controversy. While the European Commission maintains its legal reasoning is sound, the European Central Bank has raised concerns that such a move could undermine international trust in the euro if it appears the EU is improperly seizing foreign assets.

Most of the frozen assets belong to the Russian Central Bank and are held in Euroclear, a financial clearing house based in Brussels. Belgium, as the host country, fears potential Russian retaliation—whether through legal channels or other means. Euroclear itself has expressed concerns about the legal foundation of the commission’s plan and worries that international investors might lose confidence in the institution if it transfers Russian assets to an EU debt instrument.

Adding to the tension, the Russian Central Bank recently announced it is suing Euroclear in a Moscow court. While analysts believe the lawsuit has limited chances of success, the legal action increases pressure on all parties ahead of the summit.

The Commission has proposed an alternative approach that would involve raising funds on international markets, similar to how it financed the post-pandemic economic recovery fund. Belgium prefers this second option, but it would require unanimous agreement from all 27 EU leaders—a significant obstacle given Hungary’s staunch opposition to funding Ukraine. Hungarian Prime Minister Viktor Orbán, who portrays himself as a peacemaker and is widely considered Russian President Vladimir Putin’s closest ally in Europe, is expected to block such a measure.

In contrast, the “reparations loan” plan requires only a two-thirds majority to pass, meaning Hungary alone cannot veto it. Several other countries—potentially Slovakia, Belgium, Bulgaria, Italy, and Malta—remain skeptical, but even if all six opposed the measure, they would not constitute a blocking minority.

However, pushing forward despite Belgium’s serious concerns could have long-term consequences for EU cohesion. As the host country for Euroclear, Belgium has particular skin in the game, and disregarding its position might make it more difficult to build voting majorities on other issues in the future.

On the eve of the summit, considerable uncertainty remains about how the plan would be implemented, what guarantees would be provided to reassure Belgium it won’t face Russian retaliation alone, and whether leaders can approve the measure outright this week.

“It’s a really new approach. Everyone has questions,” explained a senior EU diplomat involved in the ongoing negotiations. “You’re talking about mobilizing public finances. Parliaments might need to weigh in. It’s not easy.”

The unprecedented nature of the decision facing EU leaders underscores both the extraordinary circumstances of Russia’s war in Ukraine and the bloc’s evolving approach to using economic leverage in geopolitical conflicts. Whatever path is chosen, this week’s summit could establish precedents that reshape the EU’s financial and foreign policy toolkit for years to come.