The European Union has scaled back its plan to leverage frozen Russian assets for a loan to Ukraine, reducing the target from $186 billion to approximately $105 billion over the next two years.
This was reported by The Wall Street Journal.
The reduction aims to address two key issues: assuaging concerns in Belgium, where the majority of the assets are held, and maintaining a financial reserve for the Trump administration to potentially utilize during future peace negotiations.
According to a leaked 28-point peace plan from the Trump administration—reportedly developed with Russian input—$100 billion of these assets were designated for a U.S. investment plan to rebuild Ukraine, with the remainder allocated to joint U.S.-Russian economic projects. European officials have rejected this proposal.
"With today’s proposals, we will provide Ukraine with the means to defend itself and to negotiate peace from a position of strength," stated European Commission President Ursula von der Leyen.
A five-hour meeting between U.S. special envoy Steve Witkoff and Vladimir Putin at the Kremlin on Tuesday yielded no breakthrough.
The EU holds approximately $245 billion in sanctioned Russian central bank assets, while another $55 billion is frozen in the U.S. and other nations.
The loan mechanism stipulates that the EU lends the assets to Ukraine, while Belgium-based Euroclear, which holds two-thirds of the funds, receives a guarantee of indemnification should it be forced to return the money to Russia.
According to IMF estimates, the €90 billion in tranches over two years would cover two-thirds of Ukraine's financing gap for 2026-2027. EU officials project that Ukraine could face a liquidity crisis by spring.
If the proposal is approved, more than €100 billion of Russian assets in the EU would remain untouched a year from now—preserving a potential lever for Europe in a peace process from which it has largely been sidelined.
The EU's decision to trim the loan must be viewed in the context of Trump's 28-point peace plan, which envisions using $100 billion of frozen Russian assets for U.S. investment schemes and joint U.S.-Russian projects. Analyst Yuriy Romanenko notes that this plan was drafted without Ukrainian or European participation; Kyiv and Brussels were presented with a ready-made architecture reminiscent of Czechoslovakia at Munich in 1938. European diplomats have repeatedly pointed to frozen assets as a key lever to ensure EU interests are considered in negotiations.
Belgium remains the primary obstacle to more ambitious plans regarding Russian assets. Prime Minister Bart De Wever has set three conditions: a clear legal basis, full risk-sharing among all EU nations, and synchronized action by all states holding frozen Russian assets. The Euroclear depository, holding roughly €190 billion in Russian funds, has threatened legal action in the event of asset confiscation, emphasizing the critical importance of trust and reputation for financial market stability.
The "reparation loan" mechanism developed by the EU in recent months provides that Ukraine will repay the funds only after receiving reparations from Russia. The scheme utilizes approximately €176 billion in cash accumulated from Russian bonds at Euroclear, while the sovereign assets themselves are not confiscated—they are to be returned once sanctions are lifted. Scaling the plan back to €90 billion allows over €100 billion to be kept in reserve—serving both as insurance for Belgium and a potential bargaining chip with the Trump administration.
