A coalition of European Union member states including Sweden, the Netherlands, Spain and Poland has written to the European Commission demanding immediate action to unblock 200 billion euros in frozen Russian sovereign assets.
The member states called for an immediate resumption of technical and legal work to turn the immobilized central bank funds into a reparations loan for Ukraine, following months of inactivity after a previous proposal stalled.
The letter was reported by the Financial Times, which cited the joint document sent to Brussels. Swedish Foreign Minister Maria Malmer Stenergard stated that it was time to start a new discussion on how to continue using Russia's frozen assets for the benefit of Ukraine and Europe, describing the approach as a fair and reasonable way to guarantee that Ukraine can defend itself and the continent.
An earlier plan to establish the reparations loan collapsed at the end of 2025 following a veto by Belgium. Most of the Russian sovereign assets targeted by the initiative are physically held in Belgium at Euroclear, a major financial settlement house and depository.
Following the Belgian veto, the European Union approved an alternative 90 billion euro loan package for Ukraine covering 2026 and 2027, funded through the issuance of joint eurobonds. Although European leaders promised at the time to continue working on a reparations loan backed by Russian assets, no progress has been reported since, prompting the signatory nations to demand a formal progress report from executive officials.
Ukraine defense budget shortfall
European leaders have openly stated that the previously agreed 90 billion euro package will not be sufficient for Ukraine to defend its cities against daily shelling and fund its ongoing military operations.
Ukrainian President Volodymyr Zelenskyy stated on August 23 that the total budget deficit for the Ministry of Defence stood at 27 billion dollars. Zelenskyy warned that between 8 billion and 10 billion dollars is required immediately to supply the armed forces with weapons during the first quarter of next year.
Revenues generated from immobilized Russian assets are already being drawn upon for separate aid packages. Interest earned on funds blocked at the Euroclear depository in Belgium is currently being used to service a loan of up to 50 billion euros that was agreed by international partners in 2024.
European Commission loan structure
The European Commission officially proposed using immobilized Central Bank of the Russian Federation assets to provide financial aid to Ukraine on December 3, 2025. When Belgium exercised its veto against that mechanism, European officials were forced to implement the backup plan involving eurobonds.
Under the original mechanism drafted by the European Commission, Russia's legal claims to the frozen assets would remain intact while the cash itself was invested in a specialized debt instrument. That operation was designed to alter the form of the assets on the balance sheets of Euroclear and other financial depositories, thereby releasing cash for Ukraine's defense and reconstruction.
To ensure that financial institutions could fulfill their obligations to the Russian central bank if sanctions were ever lifted, the European Commission designed a three-tier protection system. The framework incorporated member state guarantees, an EU liquidity facility, and EU debt securities, which officials said would eliminate the possibility of depositories suffering uncompensated financial losses.
The European Commission acts as the executive body of the European Union, overseeing the implementation of decisions and the administration of shared financial policies. Euroclear, headquartered in Brussels, serves as a financial market infrastructure company that processes cross-border transactions and holds the vast majority of the Russian state reserves frozen across Europe following Russia's invasion of Ukraine in 2022.
