EU Approves Indefinite Freeze of Russian Assets to Fund Ukraine Support Package

The European Union is poised to implement an indefinite freeze on Russian central bank assets held in Europe, a significant step toward utilizing these funds to support Ukraine's defense against Moscow's invasion.

EU member states are expected to approve by 1600 GMT, through a qualified majority vote, a strategy to immobilize Russian sovereign assets valued at 210 billion euros ($246 billion) for as long as necessary to prevent major economic disruption to the EU economy.

This new freezing mechanism will replace the current system that requires unanimous renewal every six months. The assets will remain frozen "until there is no longer an immediate threat to the economic interests of the Union," eliminating the risk that countries with closer Moscow ties like Hungary and Slovakia could block future renewals and force the EU to return the assets to Russia.

Hungarian Prime Minister Viktor Orban expressed strong opposition on Facebook, claiming the EU decision would "cause irreparable damage to the Union" and pledging that "Hungary will do everything it can to restore a lawful state of affairs."

Russia's central bank promptly condemned the EU plans as illegal, reserving the right to use all available means to protect its interests. The bank also announced it has filed a lawsuit in a Moscow court against Brussels-based Euroclear, which holds 185 billion euros of the frozen assets, alleging harmful actions affecting its ability to access its funds and securities.

The indefinite freeze aims to convince Belgium to support an EU plan for extending a loan of up to 165 billion euros to Ukraine, covering its military and civilian budget needs through 2026 and 2027. This loan would effectively function as a grant, as Ukraine would only repay it when Russia pays war reparations.

Danish Finance Minister Stephanie Lose, representing the current EU presidency, advocated for the reparations proposal as "by far the best option" since "it doesn't stress countries, public finances, public debt levels." While acknowledging ongoing concerns among some member states, she expressed hope for resolution before the European Council meeting.

EU leaders will gather on December 18 to finalize details of the Ukraine loan arrangement, addressing remaining issues including guarantees for Belgium against potential legal liability from Russian lawsuits.