EU summit on knife-edge over plan to fund Ukraine using Russian assets

European Union leaders are meeting in Brussels to decide on a contentious proposal to use nearly $250bn in frozen Russian assets to support Ukraine’s war effort against Russia, amid deep divisions among member states.

The vote centres on whether the EU can use about 210 billion euros ($246bn) in Russian central bank assets frozen within the bloc as the basis for a loan to Kyiv over the next two years that Moscow would eventually pay back in projected war reparations, which the Kremlin rejects.

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The proposal comes as United States financial support for Ukraine dries up under the administration of President Donald Trump, and EU national budgets are already under strain.

Without additional EU funding, Ukraine could run out of money by April next year, a scenario EU officials fear would lead to a military defeat and increase the risk of Russian influence in Europe and feared spillover of the conflict across Europe’s borders.

Ukraine’s President Volodymyr Zelenskyy has warned that a failure to finance Kyiv would embolden Russia and raise the risk of new wars, including on European soil.

It comes after the European Commission put forward a backup plan under which the EU would raise the funds itself to lend to Ukraine, with the option shelved for now amid opposition from Hungary’s Prime Minister Viktor Orban, who would be expected to vote against the measure, which requires unanimous approval from all 27 member states.

Belgium hesitant

Analysts say the use of frozen Russian assets is now effectively the only viable option for EU funding Ukraine’s war effort, though German Chancellor Friedrich Merz said the chances of agreement remain “fifty-fifty”.

The proposal would be unprecedented. Even during World War II, German state assets were not seized, analysts note.

Belgium’s Prime Minister Bart De Wever told parliament on Thursday that he remained deeply concerned about the legal and financial risks, having previously opposed the measures over fears Belgium could be forced to compensate Russia if courts later rule the use of the frozen assets is unlawful.

Belgium is demanding binding commitments from other EU states to cover all potential liabilities, and wants assurances that Russian assets held outside Belgium would also be used.

The majority of frozen Russian assets in Europe – about $185bn – are held by Euroclear, a Brussels-based financial services company.

Some countries, including Germany and the Netherlands, have said they are prepared to back up the loan, while others, such as Italy and Bulgaria, remain hesitant.

Although the plan requires only a qualified majority rather than unanimity, EU officials are keen to secure Belgium’s support. A Belgian vote against the proposal would be politically damaging, given Brussels’s role as the EU’s institutional centre.

Risk of antagonising Russia

Russia’s central bank said on Thursday it would sue European banks in Russian courts over any attempt to use frozen Russian assets to finance Ukraine.

Chris Weafer, chief executive of the consultancy Macro-Advisory, told Al Jazeera that Moscow would likely see such a move as the start of a financial war with the EU.

“Moscow is now drawing a line on this issue,” Weafer said, adding that Russia would likely “retaliate based on what Europe does”.

Russia’s central bank has already launched legal proceedings against Euroclear, which holds most of the frozen assets, as well as against institutions in France, Austria and the United Kingdom, Weafer said.

He added that the EU was unlikely to proceed without Belgium’s backing and that many EU states were increasingly reluctant or financially unable to continue funding Ukraine directly.

“So the EU is desperately looking for an alternative source of money,” Weafer said.

Attacks continue along the front line

Inside Ukraine, Russian forces carried out attacks across multiple regions, injuring dozens of people, including in Kryvyi Rih, as well as the Zaporizhia, Cherkasy and Odesa regions.

In Russia, three people – including two crew members of a cargo vessel – were killed in Ukrainian drone attacks on the port of Rostov-on-Don and the nearby town of Bataysk, according to the regional governor.

Russia shelled Ukraine’s Donetsk region 18 times, killing three residents, Governor Vadym Filashkin said.

Ukraine’s acting Energy Minister Artem Nekrasov said Russian attacks overnight cut electricity supplies in five regions, affecting about 180,000 people.

Ukrainian shelling in Russian-occupied Kherson killed a 72-year-old woman and injured six others, according to regional Governor Volodymyr Saldo.

Heavy ground and air fighting continues across eastern Ukraine, including around Kupiansk, Lyman and Sloviansk.

Ukraine said it shot down 330 drones during what it described as major Russian air attacks, while Russia said its air defences intercepted 47 Ukrainian drones overnight.