EU weighs moving frozen Russian assets to new EU-level custodian to sidestep Belgian objections
European circles are exploring transferring frozen Russian assets from Belgium's Euroclear depository to a new EU-controlled custodian, which would shift legal responsibility from Belgium to the EU as a whole and remove Belgium's objections to using the funds for Ukraine. Ukraine's Foreign and Finance ministries have already submitted concrete proposals to Brussels. The European Commission treats the idea as theoretical, with no draft legislation prepared and several technical questions — legal basis, management structure, loss coverage in case of court rulings in Russia's favor — still open.
Key points
- Idea would move Russian assets from Belgium's Euroclear depository to a new EU-controlled custodian, shifting legal responsibility from Belgium to the EU level.
- Ukraine supports the concept and its Finance Ministry has sent a concrete proposal to Brussels for a European-level mechanism to receive the funds.
- Ukraine's MFA says decisions on spending the money on defense, resilience and reconstruction would be made collectively by all EU governments.
- EU currently views the plan as theoretical: no draft legislative proposal exists from the European Commission and the legal and financial mechanism is unwritten.
- EU Commission still needs to propose a legal basis, choose or create a managing financial structure, and define how losses and liability would be shared if courts rule in Russia's favor.
- Ukraine has declared a $27 billion deficit in its 2026 defense budget and asked the EU for help, including earlier disbursement from a €90 billion EU loan earmarked for 2027.
- In PACE, a separate track is being proposed to channel frozen Russian funds to Ukraine on the basis of ECHR decisions.
Why it matters
The proposal offers a possible workaround to Belgium's resistance, which blocked the European Commission's earlier reparations loan plan in December 2025. If the assets can be moved to an EU-level custodian, legal liability shifts from a single member state to the EU as a whole, potentially unlocking Russian sovereign assets for Ukraine's defense and reconstruction. With Kyiv declaring a $27 billion gap in its 2026 defense budget, a new financing source is urgent.
What happened
European expert circles are discussing a new approach to using frozen Russian assets for Ukraine: instead of leaving the funds at Belgium's Euroclear depository, the assets would be transferred to a new EU-controlled custodian. The change is meant to address Belgium's legal concerns, which the Belgian government used last year to argue against a reparations loan. Ukraine has embraced the idea: the Foreign Ministry has transmitted its vision to Brussels, and the Finance Ministry has submitted a concrete proposal for a European-level mechanism to receive the funds. A spokesperson for Ukraine's Foreign Ministry, Heorhiy Tykhyi, said decisions on how the money would be spent on Ukraine's defense, resilience and reconstruction would be collective, with responsibility distributed across EU governments. In Brussels, however, the idea is still treated as theoretical. The European Commission has not published a draft legislative proposal, and the legal and financial mechanism for transferring the assets — including how losses and liability would be covered in the event of court rulings in Russia's favor — has not been worked out. A separate track is also moving forward in the Parliamentary Assembly of the Council of Europe, where members are exploring ways to give Ukraine frozen Russian funds on the basis of ECHR decisions.
How Ukrainian sources describe it
Ukrainian outlets frame the initiative as Ukraine-driven, emphasizing that both the Foreign Ministry and the Finance Ministry have already transmitted concrete proposals to Brussels. Coverage describes the mechanism as a way to 'overcome the Belgian veto' and foregrounds Ukraine's own diplomatic and technical input. The urgency is anchored in Ukraine's declared $27 billion defense budget deficit for 2026, with Kyiv also pushing for faster disbursement from the €90 billion EU loan agreed in December 2025.
Background
In December 2025, after difficult overnight negotiations at a Brussels summit, EU leaders rejected the European Commission's proposal for a reparations loan linked to frozen Russian assets. Instead, the European Council agreed the EU would borrow €90 billion on financial markets under a guarantee of the common EU budget to transfer to Ukraine as assistance in 2026-2027. Although formally structured as a loan, the rules state that Kyiv must repay the funds only after Russia pays post-war reparations, meaning it is likely never to be repaid. Belgium had previously blocked use of the frozen assets and used legal-risk arguments against the reparations loan. Ukraine has been signalling the funding shortfall to partners since the beginning of August 2026, and President Volodymyr Zelenskyy publicly highlighted the gap on August 24, 2026.