Key facts
- The EU is debating how to use over 200 billion euros of immobilized Russian assets to support Ukraine.
- Sweden is pushing to use the assets directly to fund Ukraine without burdening EU taxpayers.
- Ukraine faces a $27 billion budget deficit for 2026.
- Belgium and its clearing house Euroclear are concerned about legal and financial risks associated with using the assets.
- A proposal suggests shifting custodianship of Russian assets to the EU to mitigate Belgian risk.
- An alternative plan, the WOLF, proposes using interest generated by the assets to create a new loan for Ukraine.
The European Union is grappling with how to utilize over 200 billion euros ($227 billion) of frozen Russian assets to provide further support to Ukraine, a debate that has seen little progress since Sweden reignited the discussion a month ago. Ukraine's President Volodymyr Zelensky has highlighted a significant budget deficit for 2026, and third countries have not fully covered the remaining funding needs beyond the EU's existing loan package.
Despite Sweden's efforts, European Commission officials indicate that any move forward requires a clear directive from member states. The European Commission's initial proposal faced strong opposition, particularly from Belgium, which hosts the clearing house Euroclear where many of the assets are held. The political deadlock persists, partly due to Sweden having a caretaker government following its September election.
As direct government action stalls, the discussion is unfolding in public forums. Former British Prime Minister Rishi Sunak argued in The Times on September 26 that using the assets would demonstrate resolve against Russia. At a European Policy Center event on September 28, Ukraine's Finance Minister Serhii Marchenko, alongside financial commentator Hugo Dixon, proposed shifting asset custodianship away from Belgium to the EU, thereby transferring legal risk. Dixon's draft regulation aims to protect Belgium from potential Russian retaliation.
However, concerns remain about the impact on market confidence and Euroclear's business. Wim Schoutens, a finance professor at KU Leuven, warned that such actions could be perceived as confiscation, potentially damaging trust in financial markets and leading countries to hold assets outside EU jurisdiction. Belgium's existing Bilateral Investment Treaty with Russia also presents a theoretical legal challenge.
Belgian Prime Minister Bart De Wever has stated that he would only support action if other nations holding Russian assets also commit to similar measures. Other significant holders include Japan, the UK, France, Canada, Luxembourg, Switzerland, and the US. While technical experts have found common ground, political will remains elusive, with Luxembourg's Foreign Minister Xavier Bettel lamenting a lack of "solidarity mechanism" and leaders "burying their heads in the sand."
Alternative proposals are also emerging. The Center for Development Finance Studies, through its director Thomas Venon, has suggested the Windfall Optimization Loan Framework (WOLF). This plan would involve immobilizing Russian assets for a fixed period, such as 15-20 years, rather than indefinitely, and using the accumulated interest to generate a new, potentially higher-yielding loan for Ukraine. This approach, building on the G7's 2024 agreement to use interest for a loan, would leave the principal assets intact for future decisions. While theoretically possible, the success of the WOLF, like other proposals, hinges on agreement among all member states.