EU leaders face crucial decision on lending Russia’s frozen money to Ukraine

European Union leaders are gathering for a summit in Brussels where a momentous decision will be made on whether to lend Ukraine tens of billions of euros in frozen Russian assets to finance its military and economic needs.

Most of Russia’s assets worth €210bn (£185bn; $245bn) in the EU are held by the Belgium-based organization Euroclear, and Belgium and some other members of the bloc have so far said they are opposed to using the cash.

Without increased funding, Ukraine’s finances will be depleted in a matter of months.

One European government official described being “cautiously optimistic, not overly optimistic” that a deal would be reached. Russia has warned the EU not to use its money.

He has filed a lawsuit against Euroclear in a Moscow court in a bid to recover his money.

The Brussels summit comes at a crucial moment in the war and all eyes are on Belgian Prime Minister Bart De Wever, who told the Belgian parliament on Thursday: “I have not yet seen any text that would persuade me to change Belgium’s position.”

US President Donald Trump has said a deal is closer than ever to ending the war, which began with Russia’s full-scale invasion of Ukraine in February 2022. US and Russian officials will meet in Miami this weekend for further talks on a peace plan to end the war, a White House official told the AFP news agency.

Russia has yet to respond to the latest peace proposals, but the Kremlin has stressed that plans for a European-led multinational force for Ukraine and supported by the United States would not be acceptable.

President Vladimir Putin made his feelings toward Europe clear on Wednesday, when he said the continent was in a state of “total degradation” and that “European pigs” – a derogatory description of Ukraine’s European allies – were hoping to profit from Russia’s collapse.

The European Commission – the EU’s executive arm – has proposed lending kyiv some €90bn (£79bn) over the next two years, out of €210bn of Russian assets in Europe.

This represents around two-thirds of the €137 billion kyiv is thought to need to get through 2026 and 2027.

So far, the EU has given Ukraine the interest generated by the cash, but not the cash itself.

“This is a decisive moment for Ukraine to continue fighting over the next year,” a Finnish government official told the BBC. “Of course there are peace negotiations, but this gives Ukraine the advantage of saying ‘we are not desperate and we have the funds to continue fighting.'”

Commission head Ursula von der Leyen says this will also increase the cost of the war for Russia.

Russia’s frozen assets are not the only option on the table for EU leaders. Another idea, supported by Belgium, is based on the EU borrowing money on international markets.

However, that would require a unanimous vote and Hungary’s Viktor Orban has made clear that he will not allow more EU money to help Ukraine.

For Ukraine, the hours ahead are important and President Volodymyr Zelensky is expected to attend the EU summit.

Ahead of the Brussels meeting, EU leaders wanted to emphasize the momentous nature of the decision.

“We know the urgency. It is acute. We all feel it. We all see it,” von der Leyen told the European Parliament.

German Chancellor Friedrich Merz has played a leading role in pushing for the use of Russian assets, telling the Bundestag on the eve of the summit that it was about sending a “clear signal” to Moscow that continuing the war was pointless.

EU officials are confident they have a solid legal basis for using frozen Russian assets, but so far the Belgian prime minister is unconvinced. His defense minister, Theo Francken, warned before the talks that it would be a big mistake to lend money to Euroclear.

Hungary is seen as the biggest opponent of the move and, ahead of the summit, Prime Minister Orban and his entourage even suggested that the frozen assets plan had been removed from the summit agenda. A European Commission official stressed that this was not the case and that it would be a matter for the 27 member states at the summit.

Robert Fico of Slovakia has also opposed the use of Russian assets if it means the money will be used to purchase weapons rather than for reconstruction needs.

When the pivotal vote finally takes place, a majority of about two-thirds of member states will be needed to pass it. Whatever happens, European Council President António Costa has promised not to overlook the Belgians.

“We are not going to vote against Belgium,” he told Belgian public broadcaster RTBF. “We will continue to work very intensively with the Belgian government because we do not want to approve something that might not be acceptable to Belgium.”

Belgium will also be aware that ratings agency Fitch has placed Euroclear on negative watch, partly due to “low” legal risks to its balance sheet arising from the European Commission’s plans to use Russian assets. Euroclear’s chief executive also warned against the plan.

“Of course, there are still many setbacks and obstacles on the way. We have to find a way to respond to Belgium’s concerns,” the Finnish official added. “We are on the same side as Belgium. We will find a solution together to ensure that all risks are controlled as far as possible.”

However, Belgium is not the only country that has doubts and most are not guaranteed.

Italian Prime Minister Giorgia Meloni has told Italian parliamentarians that she will support the agreement “if the legal basis is solid.”

“If the legal basis for this initiative were not solid, we would give Russia its first real victory since the beginning of this conflict.”

Malta, Bulgaria and the Czech Republic would also not be convinced by the controversial proposals.

If the deal is approved and Russian assets are handed over to Ukraine, the worst-case scenario for Belgium would be a court ordering it to return the money to Russia.

Some countries have said they would be willing to provide billions of euros in financial guarantees, but Belgium will want to see the numbers add up.

In any case, Commission officials are confident that the only way for Russia to get it back would be to pay reparations to Ukraine, at which point Ukraine would repay its “reparations loan” to the EU.