Italy, Belgium, Bulgaria, and Malta have cautioned the European Commission against using frozen Russian assets to support Ukraine, citing potential risks to the EU’s financial system. According to a report by Politico Europe, the four countries have urged the EU to explore alternative options to fund Ukraine, such as an EU loan facility or bridge solutions, that are in line with international law and present fewer risks.

The European Commission had hoped to secure approval from member states for a plan to use frozen Russian assets to aid Ukraine ahead of the European Council meeting on December 18-19. However, some member states, including Belgium, which holds the majority of Russia’s frozen assets, have expressed concerns that seizing the funds could undermine trust in the EU’s financial system, trigger capital flight, and expose member states to legal risks.

On Friday, the EU invoked emergency powers to extend the asset freeze indefinitely, despite potential vetoes from Hungary and Slovakia. While Italy, Belgium, Bulgaria, and Malta supported the measure, they emphasized that the decision did not prejudge the use of frozen Russian assets, which would require a separate decision at the leaders’ level.

The move has been met with criticism from Hungarian Prime Minister Viktor Orban, who called the vote unlawful, and Slovakian Prime Minister Robert Fico, who argued that providing financial support to Ukraine would prolong the conflict with Russia. Russia has also warned that seizing its assets would be equivalent to theft and has vowed to retaliate. The Russian Central Bank has initiated legal proceedings against Belgian clearinghouse Euroclear, which holds the bulk of Moscow’s foreign assets in Europe.

The dispute highlights the challenges facing the EU as it seeks to support Ukraine while navigating the complexities of international law and the potential risks to its financial system. The European Commission will need to carefully consider the concerns of its member states and explore alternative solutions to address Ukraine’s financial needs. The issue is likely to be a key point of discussion at the upcoming European Council meeting.