BRUSSELS — U.S. President Donald Trump is positioning himself as the key player in the ongoing negotiations to end the war in Ukraine.
However, Brussels possesses a €200 billion secret weapon.
After being excluded from discussions with the U.S. and Russia on February 18 regarding the war in Ukraine, European governments are contemplating a drastic move: seizing Russian sovereign assets that have been immobilized since Moscow’s full-scale invasion of Ukraine three years ago.
Fortunately for the bloc, the majority of these funds — approximately €200 billion — is held in the Brussels-based financial institution Euroclear, accruing interest. In contrast, the U.S. possesses a mere $5 billion.
Seizing these assets would significantly enhance Europe’s leverage, especially after being sidelined in recent talks held by the U.S. and the Kremlin in Riyadh, Saudi Arabia.
As finance ministers and central bank governors convene in South Africa for the G20, EU governments remain divided on whether unfreezing these funds would demonstrate to Trump that Brussels still has influence or if it would backfire.
Bargaining Chip
With the looming threat of U.S. disengagement from Ukraine, advocates for a tougher stance argue that unfreezing these assets and allocating them to Kyiv would strengthen the war-torn nation’s position on the battlefield and resist Trump’s pressure to end the conflict.
“Using the Russian frozen assets, we can compensate for U.S. support if the U.S. opts not to assist Ukraine anymore,” stated Estonian Foreign Minister Margus Tsahkna on Monday.
“We have €300 billion worth of Russian frozen assets in Europe, and we need to utilize them,” Tsahkna asserted to reporters in Brussels, alongside counterparts from Denmark, Sweden, Lithuania, and Latvia. (While the exact figure of Russian frozen assets in Europe is uncertain, it is generally accepted to be closer to €200 billion.)
Baltic and Nordic nations, as neighbors to Russia, advocate for the immediate transfer of these funds to Ukraine, a viewpoint supported by Poland, Czechia, and the EU’s chief diplomat, former Estonian PM Kaja Kallas.
“I dismiss the argument that it’s legally problematic … we require [the] political will to proceed,” said Lithuanian Foreign Minister Kęstutis Budrys in an interview with POLITICO, adding that skeptical nations “must provide stronger arguments against it.”
Conversely, the opposing faction, which includes major players like France, Germany, Italy, Spain, and European Commission President Ursula von der Leyen, fears that seizing these funds could deter international investors and undermine the EU’s negotiating power.
“If you were to unfreeze [the assets] and give them to Ukraine, you no longer have them and cannot use them as a bargaining chip,” remarked an EU diplomat from the opposing camp, who spoke on the condition of anonymity to discuss sensitive negotiations.
French President Emmanuel Macron asserted that the Western allies could legally utilize the proceeds from these assets during the war, while emphasizing the illegality of seizing the reserves. He noted that maintaining the freeze on assets is crucial for leverage.
“It’s part of the negotiation at the end of the war,” he emphasized.
Kallas herself acknowledged the slim prospects of confiscating Russian funds in the immediate future.
“We need to garner everyone’s support for this. Currently, we do not have it,” she stated during a press conference on Monday.
Frozen Assets as Leverage
The opposition argues that unfreezing funds at this juncture would weaken the EU’s negotiating power in peace discussions with Russia.
Following a meeting with Russian Foreign Minister Sergey Lavrov in Riyadh last week, U.S. Secretary of State Marco Rubio suggested that the EU’s involvement in peace talks will be essential “at some point” due to the sanctions it has imposed on Russia.
European nations recognize that the billions of euros in frozen Russian assets provide additional leverage over the Kremlin.
“If they [Russia] wish to reclaim their funds, they must offer something in return,” the aforementioned EU diplomat stated.
Although Estonia’s Tsahkna favors releasing the seized funds directly to Kyiv, his government acknowledges the strategic advantage of retaining the assets as leverage. In a prepared paper for an upcoming meeting of EU foreign ministers, Tallinn noted that “continued withholding of assets serves as a financial and diplomatic lever, ensuring that Russia has a clear, tangible incentive to negotiate a settlement and compensate Ukraine.”
The EU’s 27 leaders have also legislated that these assets will remain frozen until Russia agrees to pay post-war reparations to Ukraine.
Countries are eyeing the €200 billion pool as a potential resource to cover the staggering costs of rebuilding Ukraine, estimated at $486 billion by the World Bank.
“Many are against unfreezing because they view this as money for reconstruction,” explained a second EU diplomat.
As discussions with the U.S. progress, Russia has shown a willingness to consider this, provided the funding also addresses the reconstruction of Ukrainian regions currently under Moscow’s control, according to Reuters.
Last year, the G7 group of industrialized nations reached a significant agreement to use the profits generated by these assets to support a $50 billion loan to Ukraine.
G7 finance ministers will reconvene in Cape Town on Wednesday and Thursday, within the G20 framework, to discuss future support for Ukraine.
