EU leaders face crunch decision on using frozen Russian assets for Ukraine

BRUSSELS - European Union leaders were set to decide whether to use frozen Russian assets to lend billions of euros in cash to Ukraine to keep its war effort afloat, at a summit on Dec 18 seen as a critical test of the group’s strength.

The EU sees Russia’s war as a threat to its own security and wants to keep ​Ukraine financed and fighting.

“We just can’t afford to fail. We have to show that we are strong,” EU foreign policy chief Kaja Kallas said, adding that leaders would stay as long as needed at the Brussels summit to find a solution.

‘Money today or blood tomorrow’

The European Commission has proposed using frozen Russian central bank assets that are mostly held in a Belgian clearing house

to secure a huge loan to Kyiv

. But Belgium is deeply concerned about legal and financial risks, and other states, including Italy, have also expressed worries.

EU leaders arriving at the summit said it was imperative they find a solution. They were also keen to show European countries’ strength and resolve after US President Donald Trump last week called them “weak”.

“Now we have a simple choice – either money today or blood tomorrow. And I am not talking about Ukraine only, I am talking about Europe,” Polish Prime Minister Donald Tusk said.

European Commission chief Ursula von der Leyen said she would not leave the summit without agreement on how to finance Ukraine over the next two years.

Ukrainian President Volodymyr Zelensky was due to participate in the summit in person. He had previously been expected to join by video call, underlining the urgency of the situation as seen from Kyiv.

Belgium wants more guarantees on risk sharing

Belgian ​Prime Minister Bart De Wever told his country’s Parliament early on Dec 18 that he had not yet seen guarantees that answered his concerns on legal and liquidity risks, and that financing plans were still changing “as we speak”.

Russia’s central bank on Dec 18 issued a new warning to the EU, saying it may seek compensation in local courts from European lenders should the bloc proceed with using assets frozen in Europe to support Ukraine.

In a statement, the Bank of Russia said it will seek to recover “damages caused by the unlawful blocking and use of its assets, in an amount equal to the illegally withheld assets and lost profits”. It did not specify which banks it may target and its press service did not immediately respond to a request for comment.

The stakes are high because, without the EU’s financial help, Ukraine will run out of money in the second quarter of 2026 and most likely lose the war to Russia, which the EU fears would bring closer the threat of Russian aggression against the bloc.

Ms Kallas said she saw chances of a deal on the assets at 50-50.

German Chancellor Friedrich Merz said: “My impression is that we can come to an agreement.”

Sweden’s Prime Minister Ulf Kristersson said this was the most important EU summit since the war in Ukraine started. “I believe and hope that we can find technical solutions to the issues that Belgium still has outstanding, but I would like to emphasise that we are not there yet,” he said.

Reparations loan is ‘only game in town’

One of the financing options could be for the EU to borrow the needed amount against the security of the EU budget and then lend the money to Ukraine. But such a move would require unanimity among the ​27 EU countries, and Moscow-friendly Hungary has already said it would veto it.

Another option would be for each willing EU country itself to raise money on the market and pass it on to Kyiv, but that would mean a rise in the already high debt and deficit levels and a lack of longer-term financing certainty for Ukraine.

Diplomats said the use of the Russian assets was therefore in practice “the only game in town” and favoured by most countries because it ensured a large sum for Ukraine without increasing national debts or any immediate fiscal effort.

But to use it, EU leaders first need to convince Belgium, which holds €185 billion (S$280 billion) of the total €210 billion frozen in Europe, that they will not leave it alone with the bill if Russia successfully sues in international courts over the plan.

Most EU countries are willing to give such guarantees. The discussions among leaders on Dec 18 were set to focus on narrowing down the scope of the guarantees Belgium is asking for to a form that would also be acceptable to other EU countries, diplomats said, stressing a financing solution for Ukraine would be found.
REUTERS, BLOOMBERG