The European Union is set to vote on a historic proposal to use billions in frozen Russian assets to fund Ukraine on Thursday.
It comes at a critical juncture in peace talks, after president Vladimir Putin called European leaders “little pigs” on Wednesday and US president Donald Trump accused the continent of showing weakness.
Europe has floated an unprecedented plan to raise £80bn out of a total of £250bn in frozen Russian assets for Ukraine to support its war effort and, in turn, put pressure on Putin to end the war.
The EU has been locked in talks for months about the legal and financial ramifications of freezing the assets, but caution continues to hold up delivery at a crucial time.
Belgium, which holds the majority of the assets, fears it could have to pay back everything on its own if Russia successfully challenges the plan. Its backing will depend on the EU sharing out responsibility.
Russia has already vowed to strike back with “the harshest reaction” against any “illegal action” by the EU around its frozen assets and has called the scheme “theft”.
As it stands, the European Commission is looking to find £80bn ($105bn) for Ukraine through frozen assets or international borrowing.
The money – made up of private assets such as yachts and real estate as well as sovereign assets including cash, bonds and securities – would support military costs and help cover basic services crippled by nearly four years of conflict.
Ursula von der Leyen, the commission president, estimated the loan would cover two-thirds of Ukraine’s funding needs for the next two years. Other partners could cover the rest, she said.
Britain also holds around £25bn of frozen Russian assets and is looking to coordinate with EU states to tap the assets. Some €290bn (£250bn) were frozen in the West after Russia’s full-scale invasion.
On Wednesday, prime minister Sir Keir Starmer warned Russian oligarch Roman Abramovich that the “clock is ticking” to hand over £2.5bn from the sale of Chelsea Football Club. He told parliament that a licence had been issued to transfer the funds to the people of Ukraine.
Leaders had aimed to agree on a reparations loan for Ukraine by October – but hopes were dashed by opposition from Belgium.
Belgium holds most of the assets Europe wants to harness. Euroclear, a central securities depository in Brussels, holds around £160bn. The main issue is that the government is wary that a successful legal challenge could leave the country having to repay the entire amount on its own.
“It would mean bankruptcy for Belgium,” foreign minister Maxime Prevot has explained.
