The agreement of the EU member states on the indefinite freezing of the… already frozen Russian funds of Euroclear was announced by the Danish EU presidency, without yet any agreement on their use to finance Ukraine with them.
The demand that any decision on the use of Russian frozen funds be taken in one of the EU, was formulated in a joint statement by the governments of Belgium, Bulgaria, Malta and Italy. The four countries underline that the issue can no longer be treated as a technical or secondary procedural matter, but requires political agreement at the highest level, as it is directly linked to the financing of Ukrainian defense and its reconstruction.
Decisive is the role of Italy, which now supports Belgium in its opposition to the European Commission’s plan to allocate 210 billion euros of frozen Russian state funds to Ukraine, according to an internal document seen by POLITICO.
Rome’s intervention, less than a week before a major EU summit on December 18-19, undermines the Commission’s efforts to seal a deal.
The four countries propose the creation of a “Plan B” based on common European loan mechanisms or transitional solutions. However, this option increases the debt of Italy and France and requires unanimity, giving Russia-friendly countries such as Orban’s Hungary a veto. Despite public criticism, these countries cannot form a blocking minority, but they are hurting the Commission’s chances of reaching a political deal next week.
Italian Prime Minister Giorgia Meloni has backed sanctions against Russia, but the ruling coalition remains divided. Hard-right Vice President Matteo Salvini has taken a pro-Russian stance and backed US President Donald Trump’s plan to resolve the war in Ukraine.
The four countries also expressed doubts about the Commission’s use of emergency powers to preserve Russian funds for the long term. Despite voting in favor of maintaining EU unity, they stressed that the decision on the use of the funds should be taken at the level of leaders. The legal provisions may have “very far-reaching legal, economic, procedural and institutional consequences beyond the particular case”.
What happens to Russian assets
This decision means that Russian state assets in Europe will remain permanently frozen under the new legal mechanism already approved yesterday by the ambassadors in Brussels (today by the governments). The European Commission now has emergency powers to keep €210bn of Russian state assets frozen until the Kremlin pays post-war reparations to Ukraine and not be forced to hold votes on the issue every six months as was required under the previous regime.
The new mechanism is a major blow to the Kremlin’s hopes of releasing its frozen assets as part of a post-war deal — an idea promoted by US President Donald Trump but met with widespread resistance in Europe. According to the legal text approved by the ambassadors, the emergency powers will be maintained until “Russia stops its aggressive war against Ukraine and pays reparations.”
The new framework is a big boost for Kiev, as it drastically reduces the chances of pro-Russian countries such as Hungary and Slovakia demanding the return of frozen funds to Russia. The emergency clause overturns the previous procedure, which required unanimous approval of sanctions every six months. Thus, countries friendly to Moscow lose the ability to free up assets simply by voting against the renewal of sanctions.
If any country tried to block the renewal after granting a loan to Ukraine, which would be secured by Russian assets, all EU member states would be obliged to repay the loan to Russia. With the new mechanism, this risk is practically eliminated.
With particular emphasis on the joint statement
As the joint statement said: “In the spirit of cooperation, Belgium, Bulgaria, Italy and Malta vote ‘YES’ in the current written procedure, but clarify that this vote in no way prejudges the decision on the possible use of the ‘frozen’ Russian assets to be taken at the level of leaders.” With this statement, the leaders of the four countries make it clear that they have agreed to freeze Russian funds indefinitely, but that they have not given their consent to the use of these funds.
The joint statement comes at a time of intense deliberation in European capitals, as several countries see a delay in the decision creating political costs, weakening European cohesion and leaving Ukraine exposed at a critical point in the war. With the pressure mounting, everyone is now waiting to see if the summit will manage to close one of the most important European foreign policy issues for 2024-2025.
