BRUSSELS — Japan has formally declined the European Union’s proposal to join its initiative aimed at utilizing frozen Russian state assets to support Ukraine, undermining the bloc’s aspirations for international backing on the matter.
During a recent gathering of G7 finance ministers, Tokyo expressed its reluctance to replicate Brussels’ strategy of providing Ukraine with the monetary equivalent of Russian sovereign assets currently held in Belgian bank Euroclear. According to two EU diplomats familiar with the discussions, Japan indicated that it cannot utilize approximately $30 billion worth of frozen Russian assets located within its territory to extend a loan to Ukraine.
EU’s efforts to mobilize global support
The European Commission is eager for EU member states to finalize an agreement to leverage up to €210 billion in sanctioned assets prior to a leaders’ summit scheduled for December 18. However, Belgium has raised concerns, fearing liability for the full amount should Russia reclaim the funds. In response, Brussels has called for additional G7 countries beyond the EU to participate in the loan initiative, utilizing Russian assets held domestically.
Belgian Prime Minister Bart De Wever emphasized that increased involvement from G7 allies would mitigate the risk of Russia retaliating specifically against Belgium. Despite these appeals, both the United States and Japan have opted not to endorse Brussels’ framework, thereby placing the responsibility for Ukraine’s future financial needs primarily on the EU.
During the meeting, the U.S. indicated plans to reduce its financial support for Ukraine following the disbursement of the last installments of a G7-wide loan negotiated by the Biden administration in 2024. The Ukrainian government is grappling with a projected budget deficit of €71.7 billion for the upcoming year, which may necessitate cuts to public spending starting in April unless new funding becomes available.
“We will continue to work together to develop a wide range of financing options to support Ukraine, including potentially using the full value of the Russian Sovereign Assets, immobilized in our jurisdictions until reparations are paid for by Russia,” finance ministers from G7 countries stated in a joint announcement following the meeting.
Legal concerns and diplomatic relations
However, they cautioned that “our action will remain consistent with our respective legal frameworks.” Japanese Finance Minister Satsuki Katayama has ruled out the possibility of employing the Russian assets due to legal implications, as disclosed by an EU diplomat briefed on the discussions.
Several officials noted that Japan’s decision may be influenced by U.S. resistance to leveraging Russian assets for Ukraine, suggesting that Tokyo is reluctant to challenge its key ally. U.S. President Donald Trump has indicated intentions to utilize the seized assets as leverage to bring Russian President Vladimir Putin to the negotiating table.
Rather than transferring the funds to Kyiv, Washington has proposed returning a portion of the assets to Russia while using the remainder to fund U.S. investments in Ukraine.
Despite this, European Commission President Ursula von der Leyen reiterated her commitment to the plan during a meeting with Ukrainian President Volodymyr Zelenskyy on Monday. She stated, “Our Reparations Loan proposal is complex but at its core, it increases the cost of war for Russia.”
Von der Leyen continued, “So the longer Putin wages his war, spills blood, takes lives, and destroys Ukrainian infrastructure — the higher the costs for Russia will be.”
In a positive development for von der Leyen’s initiative, the United Kingdom and Canada have indicated potential willingness to transfer the Russian state assets they hold to Ukraine, contingent upon the successful implementation of the EU’s plan. This issue is poised to be a focal point in the discussions scheduled for Friday between Starmer and De Wever.