Russia assets seizure plan sparks Moscow theft warning

The European Union is moving forward with a plan to use roughly €170 billion of Russia’s frozen sovereign assets to fund “reparation loans” for Ukraine. This initiative comes as the EU faces growing pressure to secure additional financing for Kyiv, especially as U.S. support wanes. Moscow has strongly condemned the asset freeze and warned that any confiscation would be deemed “theft.”

After the conflict in Ukraine escalated in 2022, Western nations froze an estimated $300 billion in Russian funds, with about €200 billion held by the Brussels‑based clearinghouse Euroclear. The frozen assets have generated billions in interest, prompting the West to consider using that revenue to finance Ukraine’s needs. Last year, the G7 backed a plan to provide Kyiv with $50 billion in loans, to be repaid from the profits of the frozen funds, with the European Union pledging $21 billion as part of the scheme.

European Commission President Ursula von der Leyen has proposed a “reparation loans” mechanism, arguing that it is urgently needed to finance Kyiv. According to sources familiar with the discussions, the plan would channel cash balances from Russia’s immobilised assets into EU‑issued bonds, with proceeds transferred to Ukraine in tranches. An alternative under consideration involves creating a special‑purpose vehicle to manage the loans, potentially allowing non‑EU partners to participate.

Of the funds frozen at Euroclear, approximately €170 billion has matured and is now held as cash on the clearinghouse’s books. However, several EU member states—including Belgium, Germany, and France—have objected, warning that using the principal could be illegal and could undermine confidence in the euro. Pressure on Brussels to cover a large share of Ukraine’s needs has intensified as Washington holds back on new aid. A U.S. note circulated among G7 capitals urged members to consider “innovatively” seizing the sovereign assets’ principal to fund Ukraine. Moscow has warned that any attempt to use the assets “will not go unanswered.” The development underscores the complex, sensitive nature of the situation and its significant implications for international relations and the ongoing conflict in Ukraine.