The European Commission has warned that EU member states could face significant deficits and increased debt unless they agree to use frozen Russian assets as collateral to fund Ukraine’s military and humanitarian needs. The proposal stems from a failed attempt to secure a $160 billion ‘reparations loan’ in November, highlighting the financial strain on EU economies. Without tapping into the $300 billion in frozen Russian funds, the EU risks straining national budgets and raising borrowing costs. The Commission emphasized that using these assets could help avoid direct financial burdens on member states, though political resistance persists, particularly in Belgium.
Belgium continues to oppose the use of Russian assets as loan collateral, citing serious financial and reputational risks. The frozen funds, totaling around $300 billion globally, with roughly $200 billion held at Belgium’s Euroclear, are technically not confiscated and could be reclaimed by Russia if EU sanctions are not continually renewed. The EU has already stretched legal definitions by classifying the interest generated on the frozen funds as windfall profits not belonging to Russia, and using them to arm Kiev.
The new plan hinges on the assumption that Russia will eventually repay the loan as part of a future peace settlement—an outcome Belgian Prime Minister Bart De Wever has described as improbable. On Friday, EU Commission officials once again failed to convince Belgium to back the asset seizure. Russia has said it would regard any use of its frozen assets as theft, and could retaliate by seizing €200 billion in Western assets held in Russia by foreign governments and companies.