Introduction
In a pivotal move to sustain Ukraine’s war effort and economy, European Union leaders have agreed to a monumental €90 billion loan package. The decision, however, comes with a significant caveat: it will not be directly funded by the roughly €200 billion in Russian state assets frozen within the bloc, a mechanism Kyiv had fervently advocated. This compromise reveals the complex legal and political tightrope the EU walks as it seeks to bolster Ukraine without escalating financial warfare.
A Bridge of Loans, Not Confiscated Assets
The newly approved funds, to be delivered through the EU’s Ukraine Facility, represent a crucial multi-year commitment. The money is earmarked for both immediate budgetary support—keeping the government functioning—and long-term reconstruction. This structure provides Kyiv with predictable financial flows, a vital element for planning its defense and recovery. The decision to utilize common EU borrowing, backed by member state guarantees, ensures rapid disbursement while navigating around the contentious asset seizure debate.
The Frozen Fortune: A Legal and Ethical Quagmire
At the heart of the discussion lies an estimated €200 billion in Russian Central Bank assets immobilized in EU jurisdictions, primarily Belgium. Ukraine and several member states argued that using the windfall profits generated by these assets, or the assets themselves, was a moral imperative. Proponents viewed it as making Russia pay for the destruction it has caused. However, Belgium, along with other financial hubs like Luxembourg, led opposition, citing profound legal risks and concerns over financial stability and the euro’s reputation as a global reserve currency.
Belgium’s Stance and the Search for Alternatives
Belgian Prime Minister Alexander De Croo articulated the core anxiety: unilateral confiscation could set a dangerous precedent for state assets worldwide and trigger retaliatory seizures of European holdings abroad. Instead, Belgium and the EU are exploring a more nuanced path. The current focus is on leveraging the *extraordinary revenues*—the interest earned—from the frozen assets. A proposal gaining traction would funnel these profits, which could amount to billions annually, toward Ukraine’s military and reconstruction needs, a solution seen as legally more defensible.
The Global Precedent and Diplomatic Repercussions
The EU’s caution is informed by a broader geopolitical calculus. An outright seizure would be viewed by Moscow and other nations, including China and Saudi Arabia, as a weaponization of the global financial system. This could accelerate a move away from euro-denominated assets, ultimately weakening the EU’s economic leverage. The bloc is therefore attempting to craft a model that delivers tangible support to Ukraine while preserving the long-term integrity of the international legal order it seeks to defend.
Ukraine’s Reaction: Gratitude Tempered by Realism
Ukrainian officials have welcomed the €90 billion package as a powerful signal of unwavering European solidarity. President Zelensky called it a “strong decision.” Privately, however, there is disappointment that the more direct “make Russia pay” model was not adopted. Kyiv continues to push for bolder action on the immobilized assets, arguing that the legal innovations required are justified by Russia’s status as an aggressor state violating fundamental international norms.
The Road Ahead: Profits, Not Principal
The immediate future will see the EU finalize the complex mechanism to channel the windfall profits from Russian assets to Ukraine. This involves unanimous agreement on the legal framework and the distribution of funds between military and civilian needs. While falling short of full confiscation, this approach still represents a historic first—using immobilized sovereign assets as a financial tool in a conflict. It establishes a new, albeit cautious, benchmark for state accountability.
Conclusion: A Calculated Compromise in a Prolonged Conflict
The €90 billion agreement underscores Europe’s commitment to Ukraine’s endurance for the long haul. By choosing loans over confiscation, the EU has prioritized immediate, substantial aid while buying time to develop a legally robust model for harnessing Russian assets. This compromise reflects the painful realities of a protracted war: the need for swift, decisive support must be balanced against the enduring structures of global finance. The bloc’s ultimate success will be measured not only by the funds delivered but by its ability to innovate within the rule of law to hold an aggressor financially accountable.
