Ukraine War18 December, 20252 min read
Zelensky Urges EU Leaders to Approve Multi-Billion Euro Loan Backed by Frozen Russian Assets Before Year-End
Zelensky urged EU to approve use of frozen Russian assets for a loan before year-end Plan would use about €210 billion frozen Russian assets to back roughly €90 billion loan
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Ukraine emergency funding appeal
Ukrainian President Volodymyr Zelensky urged EU leaders at an emergency Brussels summit to approve a multi-billion euro loan backed by frozen Russian assets before year-end. He warned Kyiv faces an acute financing gap and could run out of cash within months. The European Commission proposed using part of roughly €210bn in frozen Russian assets to lend about €90bn to Ukraine over two years to cover much of Kyiv's projected 2026-27 needs.
“Zelensky: Kyiv is ‘months from running out of cash’ (warning of imminent funding shortfalls).”
Zelensky stressed urgency, saying Kyiv is 'months from running out of cash' and that without early tranches Ukraine might have to cut drone production. EU leaders signalled urgency and cautious optimism, with Commission chief Ursula von der Leyen saying a 'solution would be found at the summit.'
Using frozen assets for loans
The Commission's plan would use immobilised Russian sovereign assets, around €210bn held across the EU and largely at Belgium's Euroclear, as backing for loans to Ukraine. It would back roughly €90bn in loans over two years and operate like a 'reparations'-style lending mechanism without formally confiscating the reserves. Under the proposal, the loans would only be repaid if Russia pays reparations.
Proponents argue this is the only realistic route that can pass by qualified majority. Legal and technical hurdles are acute: Euroclear's exposure, questions about replacing frozen holdings with EU-issued bonds, and Russia's already-launched lawsuits complicate implementation.
EU summit funding impasse
Political obstacles at the summit are centred on Belgium’s exposure as the custodian of most immobilised assets. There are demands for legal and liquidity guarantees that other states find hard to accept. Hungary’s veto power over any EU-budget-backed route is another key blockage.
“Belgian PM Bart De Wever says he lacks guarantees on liquidity and legal risks.”
Belgian Prime Minister Bart De Wever has pressed for 'full and unlimited' solidarity or other protections. Hungary’s Viktor Orbán has said he will block use of the EU budget. Some governments are exploring 'enhanced cooperation' among willing states to get around unanimity requirements.
Frozen reserves dispute
Moscow’s response has been hostile. Russia denounced proposals to use frozen reserves as 'theft', launched lawsuits against Euroclear, and warned of retaliation. Ratings agencies and market observers flagged immediate financial risks, including Fitch placing Euroclear on negative watch.
Russian legal action complicates the Commission’s timeline and underpins Belgium’s demand for risk mutualisation. Some analysts warned that repurposing sovereign reserves could deter foreign investors and unsettle global confidence in Europe as a safe custodian.
EU summit on Ukraine aid
Outlook at the summit remained uncertain as EU leaders urged urgency while weighing a delicate trade-off between speed and legal and financial safeguards. Alternatives include joint EU borrowing backed by the budget, which would require unanimity and risks a Hungarian veto. Another option is smaller groups of states using enhanced cooperation to issue debt.
“EU leaders signalled urgency and cautious optimism, while Russia has warned against the move and filed a lawsuit; some member states have offered guarantees to cover risks.”
U.S. engagement and converging diplomatic moves, including reported planned talks between U.S. and Russian envoys, add external pressure. Sources differ on the probability of success—Kaja Kallas and others put the odds at about 50/50—but most agree a timely decision is pivotal for Ukrainian defence and the EU's wider security posture.
