Newscasts - How the EU wants to use Russia's frozen assets for Ukraine

Akfen Gayrimenkul Yatirim Ortakligi

18/12/2025 19:49

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Source: 'Reuters - General news videos'

Description: European Union leaders met on Thursday (December 18) to discuss proposals, including a controversial call to use frozen Russian sovereign assets, mostly held in Belgium, to support Ukraine's financial needs for the coming years. How would these so-called "reparations loans" work? Diane To takes a look.

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Video Transcript:

European leaders are trying to find ways to finance a so芒聙聭called "reparations loan" for Ukraine with no peace deal with Russia in sight and support from the United States waning. It would help cover part of Kyiv's defense and budget needs in 2026 and 2027, estimated at nearly $160 billion. One of the key proposals dividing the EU involves using Russian central bank assets frozen in Europe after Moscow's invasion. So how would it work? Russia's central bank had bought bonds through the Belgium芒聙聭based clearing house Euroclear before the war. As these bonds have matured, the resulting cash has become stuck in Euroclear due to EU sanctions against Moscow. Senior Fellow at the Center for European Policy Analysis, Alexander Kolyandr, says the European Commission has come up with a cunning plan.

That is to issue zero芒聙聭interest bonds, so芒聙聭called "reparation bonds", against the Russian frozen assets. So, the assets are either used as collateral or simply used to buy those bonds.

The move is aimed at avoiding a major legal hurdle. Under international law, sovereign assets cannot be confiscated. Euroclear has been investing the Russian bond cash in overnight deposits at the European Central Bank. By having Euroclear invest in the EU's zero芒聙聭interest bonds instead, Europe can use the money to issue a reparations loan to Ukraine without confiscating any Russian sovereign assets. The commission's plan aims to let EU governments use up to some $193 billion from Russia's assets for the loan. That's most of the $246 billion worth of what's currently frozen in Europe. Ukraine would only have to repay the loan after receiving war reparations from Russia in a peace agreement that effectively allows it to spend the money now rather than wait until Moscow pays. The Kremlin has described the proposal as an illegal seizure of Russian property and warned of retaliation. Russia's central bank has also filed a lawsuit in Moscow against Euroclear. Belgium, where much of Russia's assets are held in Europe, is worried.

It is not acceptable to use the money and leave us alone facing the risks.

Apart from Russian retaliation, the analyst Kolyandr says there is a risk as well of reparations not being mentioned in a final peace deal. Russia's central bank may then demand its money back.

So, the Belgian government will be forced to cough up an enormous amount of money, which more or less equals the state's GDP.

Hungary has also warned against the plan.

The European Union would like to take away the money of one of the warring parties and then give it to another one. It's marching into the war.

But other EU leaders see Russia's war as a threat to their own security. European Commission Chief Ursula von der Leyen said all of Europe would share the risk together.

This is a matter of solidarity, a core principle of the European Union.

The leaders are also anxious to show unity and resolve after US President Donald Trump called them weak. For his part, Ukraine's President Volodymyr Zelenskyy described the plan as moral and fair, likening it to authorities seizing money from drug traffickers and weapons from terrorists.