The European Union has taken a significant step toward providing long-term financial support to Ukraine by agreeing to indefinitely immobilize approximately €210 billion in assets belonging to the Russian Central Bank. This decision, reached by EU ambassadors on Thursday, is a crucial component of a larger plan to utilize these frozen funds for Ukraine’s reconstruction and is occurring amid ongoing negotiations about a comprehensive aid package. The move aims to secure funds for Kyiv and also shield them from potential future compromises in peace talks with Russia.
The agreement bypasses the usual requirement for unanimous consent from all 27 member states, instead relying on a qualified majority under Article 122 of the EU treaties. This mechanism, typically reserved for economic emergencies, has been invoked due to the substantial economic impact of Russia’s invasion of Ukraine on the bloc. The immobilization prevents the Russian Central Bank from transferring the assets, the majority of which (€185 billion) are held at Euroclear in Brussels, with the remainder in private banks.
Securing Ukraine’s Future: The Immobilization of Russian Assets
Until recently, the freezing of these assets was subject to six-month renewals requiring unanimous agreement, making it vulnerable to potential vetoes. The European Commission proposed utilizing Article 122 to establish a more durable legal basis for the immobilization, arguing that the war in Ukraine has created a “serious economic impact” across the EU. This impact includes supply disruptions, increased economic uncertainty, and ongoing hybrid attacks, according to the Commission’s proposal.
The funds will remain frozen until Russia’s actions “have objectively ceased to pose substantial risks” to the European economy and Moscow has made reparations to Ukraine, without causing further economic hardship for EU member states. Releasing the assets will require a new qualified majority vote, ensuring a high threshold for any future decision.
This decision is also being viewed as a strategic move to counter external pressures, particularly concerns raised about potential US involvement in managing the frozen assets. Last month, reports surfaced regarding a US-Russia plan that included potential commercial benefits for both countries from the assets, an idea quickly rejected by Western allies. By solidifying the immobilization process within the EU, the bloc aims to maintain control and prevent unwanted interference.
Challenges to the Plan and Ongoing Negotiations
The immobilization of assets is a key pillar supporting the Commission’s proposal for a zero-interest reparations loan to Ukraine. However, Belgium, as the custodian of the majority of the funds, has expressed significant reservations and submitted numerous amendments to the legal texts. These amendments, while not public, are reportedly complicating the process.
Belgian Prime Minister Bart De Wever recently questioned the justification for invoking Article 122, comparing the use of the funds to “breaking into an embassy” and selling its contents. He argued that the EU is not at war with Russia and therefore, seizing its assets sets a dangerous precedent. Reuters provides further coverage of this debate.
In response to these criticisms, a Commission spokesperson defended the decision, stating that Russia’s war has demonstrably harmed the European economy and that applying Article 122 is legally sound. They emphasized that a Europe unaffected by the war would undoubtedly be more prosperous.
The broader context involves securing a €90 billion aid package for Ukraine covering 2026 and 2027. EU leaders are scheduled to meet at a crucial summit on December 18th to finalize this plan. The success of the summit hinges on resolving the remaining legal and political hurdles surrounding the use of Russian assets, as well as addressing concerns from member states about the overall financial commitment.
The debate over the conflict in Ukraine and the handling of Russian assets remains highly sensitive. The Council on Foreign Relations offers a detailed overview of the ongoing situation. As negotiations continue, the EU’s ability to maintain unity and overcome internal disagreements will be critical to ensuring Ukraine receives the financial support it needs.
Looking ahead, all eyes will be on the December 18th summit. The outcome will not only determine the immediate financial future of Ukraine but also signal the EU’s long-term commitment to supporting the country against Russian aggression. Stay tuned for further updates as this crucial situation unfolds.
