### EU Moves to Permanently Freeze Russian Assets for Ukraine Loan Amid Legal and Financial Concerns
European Union governments have agreed to indefinitely freeze approximately €210 billion in Russian central bank assets held within the EU, a significant step toward using these funds to support Ukraine. The decision, made under an emergency treaty clause, replaces the previous requirement for unanimous renewal every six months and aims to provide a stable legal foundation for a proposed €90 billion loan to Kyiv. This „reparations loan” is intended to cover two-thirds of Ukraine’s estimated €135.7 billion funding needs over the next two years, as the country faces severe financial strain after nearly four years of full-scale war. European leaders, including Ukrainian President Volodymyr Zelensky, argue it is „only fair” to use Russian assets to rebuild what Russia has destroyed, while Moscow has condemned the move as theft and filed a lawsuit against Belgian clearinghouse Euroclear, where most of the frozen assets are held.
The EU’s plan involves leveraging the immobilized Russian assets—largely held at Euroclear in Belgium—to raise capital for Ukraine, but it faces substantial legal and political hurdles. Belgium, concerned about potential financial liabilities and destabilization of the international financial system, has demanded robust guarantees before agreeing. Prime Minister Bart De Wever has emphasized that Belgium, while a staunch ally of Ukraine, cannot risk bearing a €185 billion burden, which would represent a third of the country’s GDP. The EU has proposed safeguards, including guarantees covering all frozen Russian assets and mechanisms to offset any retaliatory seizures of Euroclear’s assets in Russia. However, Belgium remains wary of violating EU banking regulations and the broader implications for financial stability.
Pressure to finalize the loan plan is mounting ahead of a critical EU summit, as international military aid to Ukraine has dwindled, particularly after the U.S. drastically reduced funding under President Donald Trump. The EU is exploring two main proposals: raising funds on capital markets with EU budget guarantees—which requires unanimous approval and is opposed by Hungary and Slovakia—or directly loaning cash from the frozen Russian assets. The latter option is now more feasible with the indefinite freeze in place. European officials, such as German Chancellor Friedrich Merz, assert that the assets will help Ukraine defend itself, but the path forward depends on resolving Belgium’s concerns and navigating complex legal landscapes, including non-recognition of Russian court rulings within the EU.
The outcome of these negotiations will have far-reaching implications for EU unity, international law, and Ukraine’s ability to sustain its economy and military efforts. As Belgium seeks „water-tight guarantees,” the EU must balance urgent support for Kyiv with the need to maintain financial integrity and member-state solidarity. The decision underscores Europe’s pivotal role in countering Russian aggression while highlighting the intricate challenges of repurposing sovereign assets in a contested global environment.
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