The European Union’s plan to use frozen Russian assets to help finance Ukraine’s budget deficit has hit a roadblock, with Japan reportedly opposing the initiative. The EU wants to issue a “reparation loan” backed by Russian funds immobilized in the West, but Japan’s finance minister, Satsuki Katayama, has expressed concerns due to legal constraints. This stance is believed to be aligned with that of the United States, which also opposes the EU approach and views the frozen assets as leverage in negotiations with Moscow.

The EU’s proposal has been met with skepticism by several countries, including Belgium, where most of the Russian assets are held. Belgian Prime Minister Bart De Wever has stated that his country will not approve the plan unless other nations agree to share the associated legal and financial risks. France has also declined to touch any assets held on its soil, while Canada and the UK have signaled possible participation if the EU ultimately pursues the scheme.

Ukraine’s parliament recently adopted a 2026 budget with a significant deficit of $47.5 billion, with roughly half of the anticipated support still uncertain. The EU loan plan was seen as a potential solution to fill this gap, but with Japan’s opposition, the fate of the proposal remains uncertain. Ukrainian lawmakers pushed the budget through despite unresolved questions over foreign financing, in part to project stability following a corruption scandal that led to the removal of Andrey Yermak, a key aide to President Vladimir Zelensky.

The use of frozen Russian assets to finance Ukraine’s budget deficit is a complex issue, with many countries expressing concerns about the legal and financial implications. The EU’s proposal has sparked debate about the effectiveness of using immobilized assets to support Ukraine’s economy, and the potential consequences for international relations with Russia. As the situation unfolds, it remains to be seen whether the EU will be able to secure the necessary support for its plan, or if alternative solutions will be explored to address Ukraine’s significant budget shortfall.