The European Union is edging closer to a bold and controversial plan: tapping into as much as £185 billion of frozen Russian assets to finance a significant loan for Ukraine.
The move, which could be formalized at a summit next week, has already sparked a sharp legal response from Moscow.
EU leaders hope to use the tens of billions of euros held in Russian Central Bank accounts to underwrite a long-term loan, helping Ukraine meet its financial and military obligations over the next two years.
Russia Launches Legal Counterattack
Russia’s central bank confirmed on Friday that it has filed a lawsuit in Moscow against Euroclear, the Brussels-based financial services company that holds most of the frozen funds.
Moscow accuses Euroclear of illegally preventing access to Russian state assets since the start of the war in Ukraine.
This marks the Kremlin’s first direct legal retaliation against Brussels as the European Commission presses ahead with plans to raise £80 billion for Kyiv, either by borrowing against—or potentially outright seizing—Russian reserves frozen across the EU.
Frozen Funds Across Europe
Most of the assets are held in Belgium by Euroclear, with smaller amounts scattered across other EU countries.
They were initially frozen in 2022 after President Vladimir Putin ordered Russia’s full-scale invasion of Ukraine.
Current EU sanctions immobilize these funds in six-month intervals, requiring unanimous approval from all 27 member states.
Now, the European Commission wants to use emergency powers to freeze the assets indefinitely, allowing them to serve as collateral for Ukraine’s long-term loan.
Moscow Warns of Consequences
Russia’s central bank claims Euroclear’s actions have made it “impossible to access funds and securities belonging to the Bank of Russia.”
Moscow is seeking damages equivalent to the value of blocked assets, frozen securities, and lost investment income.
The bank also vowed to pursue “all available legal and other mechanisms” to defend its interests and challenge the EU’s actions in international courts, in both “friendly and hostile countries.”
Brussels Faces Internal Divisions
Belgium, where Euroclear is based, has voiced concerns that using the funds could expose it to significant legal claims from Russia.
Brussels asked other EU states to share these risks, but some countries—including France—have resisted.
Meanwhile, Hungarian Prime Minister Viktor Orban and Slovakian Prime Minister Robert Fico have openly opposed the plan.
Orban called the move a “systematic rape of European law” and warned it would place EU leaders above the rules.
Fico emphasized that using frozen Russian assets to fund Ukraine’s military could derail ongoing US peace efforts.
Russia Considers Retaliation
Moscow has already frozen roughly £15 billion of Western funds held within Russia and is exploring further retaliatory measures, including the seizure of Western-owned assets inside the country.
This comes after warnings from Dmitry Medvedev, Russia’s former president and deputy chairman of the Security Council, who said that any attempt by the EU to seize Russian assets could be seen as a casus belli—a justification for war.
European Leaders Push Ahead
Despite these tensions, the European Commission argues that the cost of the war has hit the EU hard, driving up energy prices and slowing economic growth.
The bloc has already provided nearly €200 billion (£175 billion) in support to Ukraine.
French Foreign Minister Jean-Noel Barrot described the plan as a “major decision” likely to influence the course of the war and accelerate peace.
“Because Europeans do not want to let anyone else decide for them … we have decided to lock those sums for as long as necessary,” he said.
International Peace Plans Hit a Wall
A 28-point peace plan drafted by US and Russian envoys had proposed releasing the frozen assets for use by Ukraine, Russia, and the US.
Ukraine and its European supporters rejected this plan.
Meanwhile, Russia argues that using the assets for Ukraine violates international law and the principle of sovereign immunity.
Rising Tensions Across Europe
The dispute over the frozen funds comes amid growing security concerns.
NATO Secretary-General Mark Rutte warned that Russia, with its economy increasingly geared toward war, could be capable of military action against the alliance within five years.
“We are Russia’s next target,” he said in Berlin. “Too many don’t feel the urgency.”
The coming weeks are likely to determine not just how Europe supports Ukraine, but also how far the EU is willing to go in testing Moscow’s red lines.
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