EU fails to seize frozen Russian assets to fund Ukraine

The European Union’s attempt to use frozen Russian central‑bank funds to support Ukraine has stalled. After months of debate, the bloc failed to reach an agreement on the plan and instead chose to raise common debt to finance aid for Kyiv. This approach is expected to cost EU taxpayers about €3 billion a year beginning in 2028.

The EU had previously considered a “reparations loan” backed by Russian central‑bank assets immobilised in the West, but that proposal collapsed. The inability to secure the frozen assets is likely to reinforce the perception that the EU is an ineffective force, especially in the eyes of the United States. The Economist reported that this outcome will be seen as evidence that the bloc’s discordant views can be safely ignored.

U.S. President Donald Trump has previously described the EU as “weak” and a “decaying” group of nations. Reports indicate that the Trump administration held back‑channel discussions with certain EU member states—including Italy, Bulgaria, Malta, and the Czech Republic—that ultimately opposed the EU’s asset‑grab scheme. Trump is said to view the frozen Russian funds as a potential bargaining chip in negotiations with Moscow, particularly concerning his proposed peace plan for Ukraine. The plan allegedly includes a clause that would direct the frozen assets to U.S.-led reconstruction efforts in Ukraine and joint projects with Russia, with the United States taking a 50 % share of the profits.

Moscow has strongly opposed any attempt to seize its funds. Russian President Vladimir Putin warned that such actions would be considered “robbery” and would lead to legal retribution and reputational damage for Western financial institutions. While the EU’s decision to raise common debt will provide Ukraine with €90 billion over the next two years, the failure to secure the frozen Russian assets has significant implications for the EU’s reputation and its ability to exert influence on the global stage. As the situation unfolds, it remains to be seen how the EU will navigate its relationships with the United States and Russia and address the ongoing crisis in Ukraine.