Practical steps for using frozen Russian assets to aid Ukraine
The European Union has long debated how to channel financial gains from frozen Russian assets toward Ukraine and broader European stability. In late February, a prominent EU leader suggested that the moment had arrived to think big and consider joint purchases of military equipment for Ukraine funded by these assets. A few weeks later, as the EU Heads of State and Government prepared to meet in Brussels, the European Commission took a decisive step toward allocating a substantial portion of the annual returns from the frozen assets of the Bank of Russia. The central idea is to redirect a large share of these profits toward strengthening Ukraine and reinforcing European defense capabilities.
The original plan aimed at rebuilding Ukraine, but EU member states have faced internal constraints and urgent needs in Kyiv. The current debate centers on using the generated funds to buy military materiel that would support Ukraine in its ongoing conflict. A leading European figure stated that this approach would symbolically and practically improve life across Ukraine and Europe. The proposal under consideration would allocate ninety percent of the profits to the European Peace Fund, a resource used since the invasion began more than two years ago to finance armaments for Ukraine. The remaining ten percent would be invested to strengthen Europe’s defense industry and its strategic autonomy.
During a recent foreign ministers meeting, some European governments warned that legal obstacles might complicate the plan. Germany, initially cautious about potential legal issues, showed signs of softening its stance and now backs using the proceeds to fund weapons purchases. The discussion emphasizes the need for a robust legal framework before any formal commitment is made by the Council. The draft conclusions reviewed by European leaders include language that reflects the possibility of channeling the assets’ profits to support Ukraine, including military financing. Leaders are expected to urge Josep Borrell to move quickly with the next steps.
Upcoming steps
The proposal has been on the table for two years but has yet to gain full traction or become a firm policy. The first chance for leaders to discuss it is the forthcoming session in Brussels, though diplomatic sources expect that the European Council will not issue a final position within twenty four hours. A draft set of conclusions prepared by the Twenty-Seven countries, seen by the newspaper El Períodico, acknowledges the possibility of using the profits from frozen Russian assets to benefit Ukraine, including financing military support. The intent is to invite the head of European diplomacy to advance the next steps promptly.
Another avenue being considered to expand defense spending involves the European Investment Bank, led by Nadia Calviño. A group of fourteen member states, notably Germany, France, and Italy, has urged the bank to take a more active role in defense-related financing. The draft conclusions propose boosting joint and accelerated investment to enhance European defense capabilities. This would require improving access to both public and private funding for the European defense industry. The text also suggests exploring additional options for mobilizing funding, including innovative sources. It calls on the European Investment Bank to adapt its lending policies and the current definition of dual-use goods and to encourage development and joint procurement in areas where there are critical shortages. Efforts in this direction are viewed as essential for building European strategic sovereignty and ensuring timely access to finance for defense projects.
The discussion reflects a broader effort to strengthen Europe’s defense posture and to diversify funding mechanisms for strategic industries. Officials emphasize that any step must be accompanied by clear governance and legal clarity. The outcome remains uncertain, but the direction of travel is toward greater unity in defense expenditure and more coordinated, cross-border procurement practices. Market observers note that these moves could set a precedent for how frozen assets and innovative financing instruments might support security objectives in the region.