EU plans to release frozen Russian funds to help Ukraine

The European Union is preparing a new financial support mechanism for Ukraine that could significantly change the approach to using frozen Russian assets. It is a so-called reparations loan – funds that Ukraine will receive now, but will not have to return until Russia pays compensation for the damage caused.

Reuters reports this, citing its own sources in EU institutions.

After Russia’s full-scale invasion of Ukraine, the European Union, the United States, and other partners blocked any transactions with the Russian Central Bank and the Ministry of Finance. As a result, up to $250 billion of Russian assets were frozen in Europe. In total, according to the Central Bank of the Russian Federation itself, up to $350 billion remained abroad in the form of reserves, gold, and securities.

Most of them are concentrated in the Euroclear depository (Belgium) – mainly in euros, dollars, pounds sterling, yen, yuan and even Singapore dollars. Russia has actively invested in government bonds of the world’s leading economies, including China, Germany, France, Britain and Canada.

Previously, the European Union used only the profits from these assets: for example, in 2025, frozen funds brought in 2.7 billion euros (for half a year), which is already less than for the same period in 2024 (3.4 billion). This interest partially covered international aid to Ukraine.

However, the new plan envisages the issuance of zero-coupon bonds by the European Commission, which will be secured by frozen Russian assets. These funds will be transferred to Ukraine as a loan, but with the condition: they do not have to be returned if Russia pays reparations. Thus, the EU countries take on the risk instead of Ukraine, indicating the real debtor.

To circumvent a possible Hungarian veto, the European Commission could implement this initiative within the framework of a coalition of willing member states.

Despite the obvious benefits for Ukraine, experts warn of potential consequences. Thus, bankers fear that the precedent of confiscation of state assets could undermine confidence in Western financial systems. At the same time, Belgium expresses concern about the legal consequences for Euroclear. Euroclear itself officially stated that it is waiting for specifics from the European Commission and is monitoring the development of events.

A day earlier , French President Emmanuel Macron warned that the seizure of frozen Russian assets could violate international law and provoke “complete chaos.”

As a reminder, the European Union is developing a new mechanism that will allow the transfer of frozen Russian assets to Ukraine without their formal confiscation . According to this scheme, Russia will formally remain the owner of the funds, but actual control and use will pass to Ukraine.

Kyiv previously received €1 billion in financial assistance from the EU . These funds came from profits obtained from frozen Russian assets, becoming part of the G7 global initiative in support of Ukraine.

It is also known that the European Commission is working on launching a special fund that could potentially accumulate about 200 billion euros in such assets. This money is planned to be used for large-scale reconstruction of Ukraine after the war.