Will Europe use Russian assets to fund Ukraine? Could Moscow hit back?

European Union leaders are considering a “reparations plan” that would usage frozen Russian authorities assets to supply Ukraine with a $164bn indebtedness to assistance money its reconstruction aft the war with Russia ends.

Leaders expressed a substance of enactment and caution for the program connected Wednesday as they met successful the Danish capital, Copenhagen, days aft drones were spotted successful Denmark’s airspace, prompting airdrome closures. While the drones successful Denmark were not formally identified arsenic Russian, different European countries, including Poland, Romania and Estonia, person accused Russia of drone incursions into their airspace successful September.

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“I powerfully enactment the idea,” Danish Prime Minister Mette Frederiksen said. Swedish Prime Minister Ulf Kristersson besides said helium was “very overmuch successful favour” of the plan. Others said determination could beryllium ineligible complications, however.

Here is what we cognize astir Europe’s “reparations plan”, however it whitethorn enactment and what the effect from Russia is apt to be.

What is Europe’s ‘reparations plan’?

The reparations program was archetypal outlined by European Commission President Ursula von der Leyen successful mid-September, and backing for it has grown arsenic United States fiscal support for Ukraine wanes.

During his 2024 statesmanlike campaign, US President Donald Trump promised voters helium would propulsion the US backmost from providing precocious levels of fiscal and subject assistance to Ukraine.

Since the opening of his word successful January, Trump has made it wide the US volition instrumentality a backmost spot successful presumption of providing fiscal enactment and information guarantees to Ukraine, indicating Europe should capable the spread instead.

Europe’s program would usage Russian assets frozen successful European banks arsenic collateral for a 140-billion-euro ($164.4bn) indebtedness to Ukraine. Repayments for the indebtedness would beryllium recouped via warfare reparations from Russia, but the indebtedness would besides beryllium guaranteed either successful the EU’s adjacent semipermanent fund oregon by idiosyncratic EU subordinate states.

“We request a much structural solution for subject support,” von der Leyen said connected Tuesday. “This is wherefore I person enactment guardant the thought of a reparations indebtedness that is based connected the immobilised Russian assets.”

How overmuch successful frozen Russian assets does Europe hold?

About $300bn successful Russian Central Bank assets person been frozen by the US and European countries since Russia’s penetration of Ukraine successful February 2022.

Most of this – $246.9bn – is held successful Europe, of which $217.5bn – the immense bulk successful currency – is held by Euroclear, a Belgium-based superior markets company.

On June 30, Euroclear reported the Russian sanctioned assets connected its equilibrium expanse generated $3.2bn successful involvement during the archetypal fractional of 2025, a driblet from the $4bn successful involvement earned implicit the aforesaid play past year.

What are the challenges to this plan?

Under planetary law, a sovereign country’s assets cannot simply beryllium confiscated. Hence, loaning this wealth to Ukraine would beryllium an infringement of Moscow’s sovereign assertion implicit its cardinal slope assets.

Since astir of the assets are held successful Belgium, the state has asked for the program to beryllium fleshed retired successful lawsuit it is required to instrumentality the assets to Russia.

“I explained to my colleagues yesterday that I privation their signature saying, ‘If we instrumentality Putin’s money, we usage it, we’re each going to beryllium liable if it goes wrong,'” Belgian Prime Minister Bart De Wever told reporters successful Copenhagen connected Thursday.

On Wednesday, von der Leyen said: “It’s perfectly wide that Belgium cannot beryllium the 1 who is the lone subordinate authorities that is carrying the risk. The hazard has to beryllium enactment connected broader shoulders.”

Are immoderate European leaders hesitant astir this plan?

Yes. Besides De Wever, different European leaders person expressed hesitation oregon person asked their chap leaders to enactment retired much details of the program earlier they hold to it.

Dutch Prime Minister Dick Schoof said the connection should beryllium considered precise carefully, fixed the ineligible and fiscal risks that could arise.

Others besides signalled caution. “I deliberation that’s a hard ineligible question,” Luxembourg Prime Minister Luc Frieden told reporters. “You can’t conscionable instrumentality implicit assets that beryllium to different authorities truthful easily.”

Frieden added: “There are present different proposals connected the table, but these besides rise a full big of questions. I would similar to person answers to these questions first. Among different things, however would specified a indebtedness beryllium repaid? What would hap if Russia did not repay these reparations successful a bid treaty?”

Is the program apt to spell ahead?

Experts said European leaders would apt person to find a mode to marque the program viable arsenic the prospects of further US assistance for Ukraine adust up.

“It is going to hap due to the fact that with the US walking away, Europe is near with $100bn-plus yearly backing needs for Ukraine,” Timothy Ash, an subordinate chap successful the Russia and Eurasia programme astatine Chatham House, told Al Jazeera.

Ash explained that the bigger situation for Europe would beryllium to not spell up with the program if it means leaving Ukraine underfunded mostly and placing it astatine higher hazard of losing the warfare with Russia. “Risks to Europe would past beryllium catastrophic,” helium said, including the imaginable of tens of millions of Ukrainians migrating westbound into Europe.

If a Ukrainian nonaccomplishment successful the warfare becomes much likely, European nations would beryllium forced to ramp up defence spending to 5 percent of their gross home products (GDPs) overmuch faster than expected.

In June, members of NATO pledged to summation their defence spending to 5 percent of their GDPs by 2035.

Such an acceleration “would mean higher fund deficits, higher borrowing costs, much debt, little maturation and a weaker Europe and euro”, Ash said.

How has Russia responded?

Moscow has rebuked the EU plan, calling it a “theft” of Russian money.

“We are talking astir plans for the amerciable seizure of Russian property. In Russia, we telephone that simply theft,” Kremlin spokesperson Dmitry Peskov told reporters connected Wednesday.

Peskov said anyone progressive successful seizing Russian assets “will beryllium prosecuted successful 1 mode oregon another. They volition each beryllium called to account.”

He added: “The boomerang volition precise earnestly deed those who are the main depositories, countries that are funny successful concern attractiveness.”

Ash said Russia could instrumentality ineligible enactment against European countries if the program goes ahead. However, “it would person to assistance its ain sovereign immunity to beryllium capable to motorboat immoderate specified ineligible action. And a ineligible enactment by Russia would instrumentality years – decades to conclude.”

Russia is protected by sovereign immunity, which is simply a ineligible rule shielding overseas governments from being sued successful courts extracurricular their ain country. If Russia wants to legally prosecute this, it would request to waive this immunity, which, successful turn, would mean Russia could besides beryllium sued oregon tried successful a overseas country.

Ash added that different people of enactment Russia could instrumentality would beryllium to prehend Western assets nether its jurisdiction, but this besides does not travel without challenges. “Russia has 10 times much assets successful the West than vice versa,” Ash said. “It’s conscionable much susceptible done this channel.”

How overmuch successful Western assets does Russia hold?

Moscow said the worth of each overseas assets it holds is comparable to the frozen Russian reserves held successful the West. Citing information from January 2022, Russia’s state-run RIA quality bureau reported determination were astir $288bn of assets successful Russia that could perchance beryllium seized by Moscow.

However, Russian Central Bank records from 2022 amusement determination were $289bn successful “derivative and different overseas investments” successful Russia. By the extremity of 2023, these overseas assets had dropped successful worth to $215bn.

Ash explained: “Those assets are each overseas assets – not conscionable Western. [They include] Chinese, Indian, Middle East assets. And astir of those assets are backstage – not state.”