The European Commission is preparing to present a new instrument for the use of frozen Russian assets. Instead of full confiscation, Brussels suggests replacing them with EU bonds and transferring the liquidity to Ukraine.
This innovation could generate between €50 and €70 billion in the coming years, helping to cover Kyiv’s budget deficit and defense needs.
So far, the EU has only been able to use the interest generated from frozen Russian funds—around €3–5 billion annually—largely to service G7 loans for Ukraine.
The new approach would unlock a much larger stream of resources by redirecting maturing Russian assets into guaranteed zero-coupon EU bonds.
Legally, Russia remains their owner, but practically, the liquidity would flow to Kyiv.
Currently, when Russian bonds expire or deposits mature, the funds simply sit in accounts at the European Central Bank. Under the new “Reparations Loan” scheme, these flows would be swapped into EU debt instruments, which are among the safest in the world.
This way, the reserves remain frozen, but their form changes, turning idle money into active support for Ukraine.
Experts estimate that in the next five years, this mechanism could generate €50–70 billion, potentially frontloaded through bond issuance against future inflows. While not limitless, the amount is roughly equivalent to Ukraine’s annual defense spending—a scale of support far beyond what current ad hoc aid packages deliver.
The plan is not without risks. Moscow will claim that even this indirect mechanism amounts to expropriation and will likely file lawsuits in international courts.
Within the EU, the scheme requires unanimity. Countries such as Hungary or Slovakia, known for past pro-Moscow stances, may try to block or delay the decision for political leverage.
Another sensitive issue is reputational: the EU must ensure that other reserve-holding states do not view this as an arbitrary use of foreign assets.
Brussels stresses that the frozen assets will not be reinvested in risky instruments or diverted for EU benefit. Instead, the mechanism is designed solely as a reparations tool, consistent with international law and the principle that the aggressor must pay for its war.
Maintaining transparency is key to avoiding eroded trust in the euro as a reserve currency.
For Kyiv, the message is clear: Western support is not slowing but adapting, becoming more predictable and less subject to domestic politics in EU capitals.
For Moscow, the signal is the opposite: even frozen money will not remain neutral but will gradually transform into resources that sustain Ukraine’s stability, resilience, and future recovery from the Russian war.
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