The European Union has taken a decisive step to aid Ukraine’s defence by agreeing to indefinitely freeze €210bn (£185bn) of Russia’s sovereign assets held within the bloc.
The move, confirmed by European Council president António Costa on Friday, utilises emergency powers to immobilise the funds until Moscow ceases its "war of aggression" and compensates Ukraine for the damage caused. Prior to this agreement, the sanctions underpinning the asset freeze required renewal every six months, a process that left the policy vulnerable to vetoes from member states with closer ties to the Kremlin, such as Hungary.
The decision comes at a moment of heightened tension, as Russia’s central bank announced it is filing a lawsuit against Euroclear, the Brussels-based depository that holds the vast majority of these immobilised funds. The lawsuit, filed in a Moscow court, alleges that Euroclear’s "illegal actions" have damaged the bank's ability to manage its securities. While Euroclear declined to comment on the specific case, a spokesperson noted the organisation is currently fighting more than 100 legal claims in Russia. This legal threat complicates broader efforts to leverage the assets, particularly a proposal by the European Commission to issue a €90bn (£79bn) loan to Ukraine secured against the frozen funds.
Belgium, which hosts Euroclear, has blocked the Commission's loan proposal over fears of a cascade of lawsuits and potential seizure of Belgian assets abroad. Prime Minister Bart De Wever, who discussed the "complex issue" with UK Prime Minister Keir Starmer in Downing Street on Friday, has previously described the loan plan as "fundamentally wrong," citing risks to the euro currency and international law. While Germany has pledged to provide one-quarter of the necessary guarantees to mitigate Belgium's risk, Brussels maintains that EU partners must fully insulate it from a multibillion-euro bill.
The urgency for a solution is growing ahead of next week’s EU summit, where leaders are expected to finalise funding plans for Ukraine for 2026-27. Officials warn that Kyiv risks running out of money by next spring to fund its defence and public sector salaries. While the UK supports the plan to use the assets and expects some G7 nations to follow suit, consensus remains elusive within the EU, with Italy, Malta, and Bulgaria joining Belgium in calling for further exploration of options that align strictly with international law.