The European Union has taken an unprecedented step in its response to Russia’s ongoing war in Ukraine by agreeing to freeze approximately €210 billion of Russian sovereign funds held across the bloc indefinitely. This move replaces the old system, which required a unanimous renewal of sanctions every six months and risked being overturned by Kremlin-friendly governments like Hungary or Slovakia.
EU leaders say the indefinite immobilisation is necessary to keep the funds locked until Russia ends its war of aggression and pays reparations for the destruction inflicted on Ukraine. By invoking emergency economic powers, Brussels hopes to avoid future vetoes and give itself the legal groundwork for broader financial measures aimed at supporting Kyiv.
The freeze, agreed by qualified majority among member states, is also intended to clear a main political obstacle to the bloc’s plan to use the frozen assets as backing for a massive “reparations loan” for Ukraine — potentially up to €165 billion covering Kyiv’s military and civilian needs in 2026–27. The loan would only be repaid once Russia compensates Ukraine.
However, the plan has exposed serious rifts. Belgium — where most of the frozen assets are held by Euroclear — has repeatedly warned about legal and financial backlash, demanding guarantees against lawsuits that could be filed by Moscow if sanctions or a loan plan backfires. Several smaller EU states also caution against stretching EU law and finance rules.
Moscow has reacted furiously. Russia’s central bank has filed a lawsuit in a Moscow court against Euroclear, accusing it of damaging conduct by restricting access to the frozen reserves. Russian officials and legal statements describe the EU’s actions as “illegal” and contrary to sovereign immunity — promising wide legal challenges.
Critics such as Hungarian Prime Minister Viktor Orban claim the asset freeze breaches EU legal norms, arguing Brussels has “stepped over the Rubicon” and undermined the rule of law. EU officials counter that the assets remain Russia’s property and that the move doesn’t amount to seizure.
The bloc’s leaders are set to finalise details of Ukraine funding at an EU summit on December 18, amid fears Kyiv may run short of cash next year if new mechanisms aren’t agreed. Meanwhile, legal and diplomatic fallout from the asset freeze continues, raising complex questions about international law, economic warfare, and long-term support for Ukraine.
