How Europe Is Trying to Turn Frozen Russian Assets Into Cash for Ukraine

The European Union is racing to come up with a plan to keep money and weapons flowing to Ukraine at a moment when support from the United States is uncertain and Kyiv’s needs are gaping.

Meeting in Brussels on Thursday, leaders from the bloc’s 27 member nations are increasingly expected to support a novel, risky idea that centers on Russia’s assets that have been frozen since Moscow launched its full-scale invasion of Ukraine in 2022.

The European Commission, the E.U. executive arm, has circulated a rough plan to use that immobilized money to back a 140 billion euro ($163 billion) loan to Ukraine. On Thursday, the political leaders will decide whether the commission should make a formal proposal to do so, though hammering out the final details and reaching agreement could take months.

If they decide to pursue the plan, it would mark a first step toward making what European leaders call a “reparations loan” — a political greenlight for an idea that has big potential to help Ukraine as American aid dwindles.

But there are big risks: Russian retaliation and damage to Europe’s reputation as a safe haven for foreign assets.

Here’s what to know.

The basic idea is to use the frozen funds to back a loan.

A big chunk of the Russian government’s frozen assets sits in Euroclear, a financial institution in Belgium. Europe already funnels to Ukraine the interest earned on those deposits, about $8 billion last year.

Under the new plan, Euroclear would essentially hand control of Russia’s frozen funds to the European Union, which would use the money to back the giant loan to Ukraine. Ukraine would need to repay the money only if it received reparations from Russia.

The move is a political and financial gamble. One major question is how the Kremlin would react.

The European Union contends that the setup is legal because the money would be borrowed, not confiscated, so Russia could, at some point in the future, get it back. But a Kremlin spokesman said recently, “we are talking about theft,” and Russia warned that it could prosecute individuals and countries involved.

Critics of the plan have also warned that using Russia’s assets could make other nations, like China and India, nervous about stashing their savings in European banks, worried that their own assets could be frozen and lent out if they end up on Europe’s bad side.

E.U. officials say the plan is needed.

European Commission officials say those fears are unfounded.

“If you don’t start a war against another country, then your assets are not at risk,” Kaja Kallas, the top E.U. diplomat, told reporters on a recent trip to Kyiv, where she and President Volodymyr Zelensky of Ukraine discussed his country’s pressing budget needs.

As they downplay any risks, officials have also emphasized why they consider the plan necessary. As the war drags on, Ukraine faces not only huge ongoing costs but also a substantial budget deficit.

A major problem is that American support has dried up. From 2022 to late 2024, under the Biden administration, Congress appropriated about $174 billion in funding for Ukraine. But under President Trump, U.S. military aid to Ukraine has fallen sharply this year, according to the Kiel Institute think tank, and in recent months has been all but nonexistent.

European nations have given heavily to Ukraine, but in light of their own budget constraints, it is difficult for them to fill the gap as America steps back.

A loan backed by frozen Russian assets could theoretically make up the difference. But because key details have yet to be decided, it is not clear whether it will exactly match Ukraine’s needs or plug the holes left by the United States.

There are big unanswered questions.

It has yet to be decided exactly how Ukraine would be able to use the loan.

Some nations, most notably Germany, have suggested that the money should be dedicated to procuring weapons. But Mr. Zelensky himself has suggested that it should also be available for other budgetary needs.

And other practical details remain unresolved.

European nations could provide loan guarantees to put Belgium at ease, but it is not clear how those guarantees would be structured. Would all 27 E.U. nations have skin in the game? Would the guarantees involve any actual collateral?

Belgium wants the broader Group of 7 nations to also support the plan, but it is not clear whether Washington will agree.

Finally, the E.U. executive must have a legal plan to ensure that the assets remain frozen for a long time. If the freeze needs to be renewed regularly, as is currently the case, a more Russia-friendly nation like Hungary could throw the loan into chaos by refusing to keep the funds immobilized.

With such substantial questions lingering, a decision on Thursday would only kick off the process. But given Ukraine’s looming needs, finding answers quickly will be a priority.