BRUSSELS — The European Union is exploring a strategy to leverage frozen Russian assets, aiming to unlock billions of euros through riskier investments. This initiative seeks to bolster aid to Ukraine without raising concerns of misappropriating Russian wealth.
In a significant move, EU officials are contemplating the transfer of nearly €200 billion in frozen Russian state assets currently held in Belgium to a new investment fund designed to yield higher returns. This information comes from four officials familiar with the discussions.
Supporting Ukraine’s economy amidst funding challenges
The primary objective behind this plan is to generate additional profits to support Ukraine’s struggling economy, especially as U.S. President Donald Trump has threatened to withdraw financial assistance. These assets, which were frozen following Russia’s full-scale invasion of Ukraine in 2022, present a unique opportunity for the EU to finance aid.
Importantly, this plan does not involve outright confiscation of the Russian assets, a move that has faced opposition from several EU member states, notably Germany and Italy, due to legal and financial reservations. Instead, the EU intends to utilize the accrued interest from these assets while preserving the principal amount, thereby aiming to comply with international law.
“It is important that we hear from the Commission on the available options, especially regarding the potential use of frozen Russian assets and further steps regarding the sanctions regime,”
noted the rotating Polish Council presidency in an invitation letter to ministers, highlighting the urgency of the discussions. The G7, comprising major industrialized nations, had previously agreed to allocate €45 billion to Ukraine derived from these immobilized sovereign assets.
Exploring a new investment fund
With the EU’s €18 billion share of the G7 loan expected to be fully disbursed by the end of the year, questions loom over the continuity of funding for Ukraine through 2026. To address this, finance ministers from the EU’s 27 member states will convene for discussions in Luxembourg.
EU officials are considering transferring Russian assets into a “special purpose vehicle” under the EU’s framework. This would enable the assets to be invested in higher-risk opportunities, potentially yielding greater returns for Ukraine. While specifics on these investment types remain undisclosed, the urgency of this transition is underscored by the current sanctions regime against Russia, which requires unanimous renewal every six months.
In 2024, the profits from existing investments amounted to €4 billion, which were allocated to support the G7 loan to Ukraine. Advocates for the new fund argue that it is crucial for the EU to draw more revenue from Russian sovereign funds to ensure long-term support for Ukraine, especially as peace negotiations with Moscow remain stalled.
Another consideration is the risk of Hungary utilizing its veto power to block sanctions renewal, which could jeopardize the frozen assets. Recently, the European Commission engaged in informal talks with France, Germany, Italy, and Estonia to explore legal avenues to maintain asset freezes, should Hungary decide to oppose the renewal.
However, critics caution that any unproductive investments made through this fund could ultimately burden EU taxpayers with compensation costs. As EU officials navigate these complexities, they are striving to establish the new fund with a simple majority vote to circumvent potential vetoes from Hungary’s Prime Minister Viktor Orbán.
The EU is in pursuit of innovative solutions as its central budget of €1.2 trillion faces constraints, with a new budget set to take effect only in 2028. “It’s not going to be easy to find money under the current MFF [multiannual financial framework],” remarked an EU diplomat, reflecting the challenges ahead.
With a significant portion of the EU’s €50 billion aid to Ukraine already disbursed, officials remain cautious about further augmenting the EU’s central budget, particularly in light of Hungary’s likely resistance.