BRUSSELS — The European Commission is actively working on a plan to redirect nearly €200 billion in immobilized Russian assets towards the reconstruction of Ukraine once the conflict concludes. As officials in Brussels gauge the willingness of member states to invest these assets in riskier ventures, the initiative aims to not only generate additional funds for Ukraine but also to intensify pressure on Russia, which remains steadfast in its refusal to halt military operations.
Ursula von der Leyen, the President of the European Commission, emphasized the urgency of this matter, stating, “We are advancing the work on the Russian frozen assets to contribute to Ukraine’s defense and reconstruction.” This statement marks her most firm commitment to utilizing these assets to date.
Debate among EU nations on asset management
While the proposal to tap into Russian assets is gaining traction, it does not equate to an immediate confiscation of these funds. Many EU countries express concerns regarding the financial and legal implications of such actions. A pivotal discussion is scheduled for Saturday when the foreign ministers of the 27 EU nations will convene in Copenhagen, Denmark, to deliberate on potential strategies for leveraging revenues from frozen Russian sovereign assets.
The urgency of the situation is underscored by Ukraine’s projected €8 billion budget deficit in 2026. As the European Union grapples with constrained national budgets and the inability to issue collective debt, there is mounting pressure to find innovative funding solutions to support the war-torn nation. Estonian undersecretary for legal and consular affairs, Kerli Veski, remarked, “We hear that it’s more difficult to raise money [from national finances or the EU budget]. [But] we have those assets there and the logical question is how can we and why don’t we use those assets.”
Calls for total confiscation meet resistance
Several Baltic nations, along with other member states, have long advocated for the complete confiscation of Russian assets. Latvian Economy Commissioner Valdis Dombrovskis and Estonian Foreign Policy Chief Kaja Kallas are among the proponents within the Commission pushing for this course of action. However, significant resistance persists from Western European nations, including Germany, Italy, and Belgium, the latter of which faces heightened legal and financial risks due to its role as a host for Euroclear, the financial entity managing the majority of these Russian assets.
As a compromise, G7 nations have previously agreed to allocate €45 billion in profits from invested assets to Ukraine while keeping the original assets intact. Nonetheless, the EU’s share of an €18 billion loan is anticipated to be fully disbursed by the year’s end, prompting urgent calls for new revenue streams.
In response, the Commission’s legal team is exploring the possibility of establishing a “special purpose vehicle