European Union leaders are under intense pressure to approve a major financial lifeline for Ukraine, with a critical summit in Brussels set to decide on a plan to use frozen Russian assets to fund Kyiv's defence.
Summit Confronts Urgent Funding Dilemma
At the high-stakes meeting on Thursday, EU heads of state will be pushed to fulfil a promise to secure urgently needed cash for Ukraine. This comes as Russian forces make incremental advances on the battlefield, increasing pressure on Kyiv. The European Commission President, Ursula von der Leyen, set the tone on the eve of the summit, telling the European Parliament that supporting Ukraine's defence was the most vital act of European defence. She warned that "the next days will be crucial in securing this."
Von der Leyen framed the decision within a broader context of European security, describing the world as "dangerous and transactional." She argued that taking responsibility for security was no longer optional but an imperative. Her commission has presented two primary options to cover Ukraine's defence and civilian needs for 2026 and 2027: joint EU borrowing or a "reparations loan" secured against the roughly €210bn (£185bn) of Russian central bank assets immobilised within the bloc.
Legal Fears and Political Divisions
The proposed reparations loan, amounting to €90bn (£79bn), faces significant hurdles. Belgium, which hosts the majority of the frozen Russian assets through the Euroclear depository, has expressed deep reservations. Belgian officials fear insufficient guarantees from other member states if the scheme fails, potentially leaving Brussels with a multibillion-euro debt. These concerns have been amplified by a $230bn (£202bn) damages claim launched by the Russian central bank against Euroclear this week, raising fears of retaliatory asset seizures in courts friendly to Moscow.
Italy has emerged as a key sceptic, with Prime Minister Giorgia Meloni cautioning that using the assets without a solid legal foundation would hand Russia "the first victory since the start of the war." Both Italy and Belgium favour the alternative of joint EU borrowing as a safer method. Conversely, Germany's Chancellor, Friedrich Merz, is championing the plan to make the frozen assets "usable for Ukraine's defence," though he privately rated the chances of an agreement at just "50/50." He argued the funds could finance the Ukrainian army for at least two more years.
The Path to a Majority Decision
EU officials involved in the summit preparations indicate the reparations loan is the only viable path forward. Using the EU budget as collateral would require unanimity, which is impossible due to Hungary's declared veto. The loan scheme, however, needs only a qualified majority, though diplomats acknowledge it would be politically difficult to proceed against Belgium's will.
"A very large majority of member states favour the reparations loan," a senior EU official stated. "Any solution that would require unanimity, I don't think is realistic so we are back into the reparations loan." The EU recently used emergency powers to indefinitely freeze the Russian assets, preventing a veto from Hungary or other Kremlin-friendly states when sanctions come up for renewal every six months.
Belgium has suggested these same emergency powers could be used to generate an EU loan secured against the budget, bypassing the need for unanimity. However, other member states have dismissed this as a legal overreach. As the summit convenes, leaders must navigate these complex legal fears and political divisions to deliver a result that sustains Ukraine's resistance against Russian aggression.
