The European Union has decided to indefinitely freeze €210 billion in Russian central bank assets held within its jurisdiction, a strategic move to bolster Ukraine’s defense and reconstruction efforts amid the ongoing conflict. This new policy eliminates the need for biannual renewals of the asset freeze, which previously required unanimous consent from all 27 EU member states. By invoking Article 122 of the EU treaties, the EU can bypass potential vetoes from pro-Russian countries like Hungary and Slovakia.
Initially immobilized in response to Russia’s 2022 invasion of Ukraine, the frozen assets are primarily located at Euroclear in Belgium. The indefinite freeze is part of a plan to use these funds as collateral for a loan of up to €165 billion to Ukraine, aimed at covering its military and civilian budgets for 2026 and 2027. Ukraine would only repay this loan upon compensation from Russia for war damages, facilitating future reparations.
Belgium, responsible for a significant portion of these assets, has raised concerns over possible legal challenges and Russian retaliation. To alleviate these concerns, the EU is preparing guarantees to protect Belgium from financial repercussions, ensuring the assets remain frozen until there’s no longer an immediate threat to EU economic interests.
Russia has condemned this decision, deeming it theft and a violation of international law, and has filed a lawsuit against Euroclear to regain access to the funds. The EU contends that the assets will be utilized as a loan to Ukraine, not confiscated, insisting that their actions align with international law. EU leaders are expected to finalize details of the loan at a summit on December 18, emphasizing support for Ukraine in the coming years.
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