EU Prepares to Freeze Russian Assets, Tightening Economic Noose on Kremlin

The European Union is moving to freeze Russian central bank assets held in Europe indefinitely, removing a major obstacle to using these funds for Ukraine support. This shift from the current six-month renewal system would make it easier to secure a massive loan for Ukraine's military and civilian needs.

EU governments plan to freeze around 210 billion euros ($246 billion) of Russian sovereign assets for as long as needed, instead of voting every six months to extend the freeze. This permanent approach is designed to convince Belgium to back the EU's plan to use frozen Russian money as collateral for a loan worth up to 165 billion euros to Ukraine.

The loan would cover Ukraine's military and civilian budget needs for 2026 and 2027. But Belgium has been hesitant, worried it might face financial consequences alone if Moscow wins a potential lawsuit over the frozen assets.

Here's where it gets interesting: Germany sees no alternative to this compensation loan and is willing to guarantee 50 billion euros of the total amount. Other EU governments are also offering guarantees to Belgium, promising it won't bear any financial fallout alone if Russia successfully challenges the asset freeze in court.

The European Council will meet on December 18 to finalize the loan details and resolve remaining issues. Danish Finance Minister Stephanie Los, whose country holds the EU's rotating presidency, told reporters that "some concerns" still need addressing but expressed hope for a decision next week.

EU Economic Commissioner Valdis Dombrovskis said strong guarantees are being put in place for Belgium. "From the Commission's side, we are open to further work to look at how to accommodate Belgium's concerns, and this effort is ongoing," he said at a press conference.

This financial mechanism represents a significant escalation in how Western nations are using Russian assets to support Ukraine. The move shows EU determination to maintain long-term funding for Ukraine while navigating complex legal and financial risks that come with using another country's frozen sovereign wealth.