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 immobilised in the West, but Japan’s finance minister, Satsuki Katayama, has expressed concerns because of legal constraints. This stance aligns with that of the United States, which also opposes the EU approach and views the frozen assets as leverage in negotiations with Moscow.
The proposal has been met with scepticism by several countries, including Belgium, where most of the Russian assets are held. Belgian Prime Minister Bart De Wever has said his country will not approve the plan unless other nations agree to share the associated legal and financial risks. France has declined to touch any assets held on its soil, while Canada and the United Kingdom have signalled 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 Japan’s opposition leaves the fate of the proposal uncertain. Ukrainian lawmakers pushed the budget through despite unresolved questions over foreign financing, in part to project stability after a corruption scandal that led to the removal of Andrey Yermak, a key aide to President Volodymyr Zelensky.
The use of frozen Russian assets to finance Ukraine’s 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 immobilised 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 secure the necessary support for its plan or explore alternative solutions to address Ukraine’s significant budget shortfall.
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