The future of using Russia’s immobilized assets to aid Ukraine is in jeopardy as a new peace plan promoted by the United States clashes with the European Union’s existing proposals. The US initiative proposes releasing the approximately €300 billion in frozen Russian funds and channeling them through a Washington-managed investment platform, potentially benefiting Moscow and undermining the EU’s efforts to secure reparations for Ukraine. This development creates significant uncertainty around the EU’s strategy for providing long-term financial and military support to Kyiv.
The proposed shift, presented directly to Ukrainian officials, represents a stark departure from the EU’s goal of leveraging the assets to fund Ukraine’s reconstruction and hold Russia accountable for the devastation caused by the war. Ukrainian President Volodymyr Zelenskyy acknowledged the difficult choice facing his country, stating it’s a selection between “loss of dignity” and risking the support of a key ally. The Trump administration is reportedly pressing Kyiv for a swift agreement, with a deadline looming at the end of next week.
US Peace Plan Disrupts EU’s Russian Asset Strategy
A 28-point blueprint, reportedly drafted without European consultation and negotiated directly with Moscow, outlines a complex scheme for managing the immobilized Russian central bank assets. The plan envisions two distinct funds: one, led by the US featuring European participation, dedicated to Ukraine’s post-war rebuilding, and another collaborative US-Russian venture designed to foster “joint projects”.
Specifically, the draft suggests investing $100 billion from the frozen assets into US-led Ukrainian reconstruction efforts, with the US retaining 50% of the resulting profits. An additional $100 billion would be contributed by Europe. The remaining frozen funds, according to the plan, would be invested in a US-Russian vehicle intended to “strengthen relations” and deter future conflict.
This arrangement raises concerns that Russia could ultimately profit from the consequences of its aggression, a prospect at odds with the EU’s stated objective of making Russia bear the financial burden of the war. The vagueness of the proposal further complicates matters, leaving unanswered questions about the practical implementation of these asset-based funds.
For example, the plan doesn’t clarify whether the European contribution of $100 billion would be sourced from the Russian assets themselves, or how these funds would be allocated within Ukraine. This contrasts with Washington’s past actions, such as its reported involvement with Ukraine’s mineral resources, sparking concerns about similar patterns of exploitation.
Publicly, the EU maintains its commitment to pursuing a reparations loan. A spokesperson for the European Commission affirmed that work on utilizing the immobilized Russian assets is “intense and will continue”. However, officials privately concede that the US plan significantly jeopardizes the EU’s strategy and potentially renders the bloc ineffective in leveraging its primary source of pressure on Moscow.
Internal EU Divisions on Reparations Loan
The EU’s efforts to establish a reparations loan have already faced internal resistance, even before the emergence of the US peace plan. Belgium, which hosts Euroclear – the depository holding approximately €185 billion of the Russian assets – has been a key obstacle, demanding robust guarantees against potential Russian retaliation.
Prime Minister Bart De Wever has stated that Belgium requires “strong guarantees” and “contractually defined risk coverage” before consenting to unlock the funds. Separately, Slovakia has expressed opposition to any loan component that includes military aid, while Hungary remains firmly against the entire project, deeming it “categorically absurd”.
Conversely, Germany, Poland, the Nordic countries, and the Baltic states strongly support the reparations loan, arguing it’s the most viable path to securing financial aid for Ukraine and holding Russia accountable. Danish Prime Minister Mette Frederiksen has stated that this is “the only way forward”.
EU leaders had initially hoped to finalize a financing plan for Ukraine through 2026 and 2027 during a December summit. Ursula von der Leyen previously outlined three options: bilateral contributions from member states, common borrowing at the EU level, and the reparations loan. Diplomats indicate that relying solely on bilateral contributions is unlikely due to potential disparities in commitment. Common borrowing is seen as more realistic, but would require unanimous agreement, a challenge given Hungary’s position.
The situation remains fluid. The US peace plan’s impact on the EU’s strategy, combined with ongoing internal disagreements about the reparations loan, casts doubt on the timeline for securing long-term financial support for Ukraine. Observers will be closely watching for any signs of compromise or a shift in position from key EU member states.
