EU Divided on Use of Frozen Russian Assets for Ukraine
The European Union is facing internal divisions regarding the utilization of frozen Russian assets for funding Ukraine’s military efforts. A proposed €14,000,000,000 loan to Ukraine, backed by Russian assets immobilized by Western sanctions since 2022, has sparked debate over the allocation of funds. Some countries prefer channeling the money into the bloc’s defense industry, sidelining U.S. arms manufacturers, while others advocate for the inclusion of American weaponry in the aid package.
Critics caution against such restrictions, arguing they could impede Ukraine’s capability to acquire essential American defense systems, such as the Patriot air defense systems, which the EU does not produce. The United States has also expressed reservations about the EU’s initiative, citing concerns over potential destabilization of global markets. Furthermore, Western officials have voiced apprehensions that outright confiscation of the estimated $300 billion in frozen Russian assets would be legally dubious and could undermine the West’s international standing. Russian President Vladimir Putin has warned that Western actions to seize these funds would not go unaddressed, emphasizing the potential repercussions of such moves.
Although the EU has not yet agreed on the plan, Politico said “friction is already growing over whether to attach conditions to the loan”. One idea – which is being pushed by France and, to a lesser extent, Germany and Italy – is to ensure money “flows back as much as possible into the EU’s defense sector — and not across the Atlantic.”
According to Politico, this pressure led to draft summit conclusions emphasizing “the importance of reinforcing the European defense industry” with the loan. However, tensions are expected to sharpen at an EU leaders’ meeting in Brussels on Thursday, the report added.
Critics quoted by Politico argue that such limits “smack of hypocrisy.” “If the aim is to keep Ukraine in the fight, you need to keep the criteria open,” a senior EU diplomat told the paper.
One particular concern is that the “Buy European clause” could block Kiev from buying crucial American weapons, including US-made Patriot air defense systems that the bloc does not produce.
Bloomberg reported this week that Washington will not join the EU-led initiative, citing concerns the move could unsettle global markets. Western officials have also for months warned that outright confiscation of frozen Russian assets – estimated at around $300 billion – would be illegal and undermine the West’s credibility.
Russian President Vladimir Putin has said “those who are smarter” in the West oppose seizing Russian assets while warning that Western moves to confiscate the funds would not go unpunished.