NextFin news, The European Commission is developing a mechanism to transfer approximately €200 billion of frozen Russian assets into a dedicated fund aimed at financing Ukraine's reconstruction after the war, European officials confirmed on Friday in Brussels.
The plan, reported by Politico and detailed by Ukrainian Pravda and Obozrevatel on Friday, involves creating a special purpose vehicle similar to the European Stability Mechanism (ESM). This fund would pool the frozen assets and invest them in higher-risk projects to generate greater returns for Ukraine, while also increasing pressure on Russia, which continues military operations.
European Commission President Ursula von der Leyen stated on Thursday, August 28, that the Commission is advancing efforts to use frozen Russian assets to support Ukraine's defense and rebuilding efforts. However, the proposal does not include immediate confiscation of the assets, a move opposed by most EU member states due to legal and financial concerns.
Supporters of the plan, including the Baltic states and some other EU countries, view it as a step toward eventual confiscation and transfer of Russian assets to Ukraine as compensation for war damages. Opponents, notably Germany, Italy, and Belgium, cite risks related to legal challenges and financial liabilities. Belgium is particularly cautious because it hosts Euroclear, the financial institution holding a large portion of the frozen Russian assets.
To circumvent the need for unanimous EU approval, the Commission is considering transferring the assets to a special purpose company backed by some EU countries and possibly G7 members such as the United Kingdom and Canada, both of which support confiscation. This structure would prevent countries like Hungary from blocking the use of these funds by vetoing sanctions extensions.
Euroclear's CEO Valérie Urbin expressed concerns that if the fund's riskier investments fail, EU taxpayers would bear the losses. Belgium has called for other EU countries to share responsibility for the Russian assets.
The proposal is scheduled for discussion on Saturday, August 30, during an informal meeting of the 27 EU foreign ministers in Copenhagen, Denmark. The agenda includes exploring further options for utilizing revenues from frozen Russian sovereign assets.
Additionally, the EU is exploring the possibility of using profits from these assets to finance a $10 billion U.S. arms package for Ukraine, according to Obozrevatel.
Sources: Ukrainian Pravda (August 29, 2025), Obozrevatel (August 29, 2025), Politico.
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