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Hungarian leader Viktor Orban said the EU proposal is ‘dead’ and will be rejected in a vote at the Brussels summit
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Polish prime minister Donald Tusk has warned that the European Union must choose between “money today or blood tomorrow” as EU leaders meet to vote on the use of £185bn of frozen Russian assets.
The European Commission has proposed that the assets be used to secure a reparations loan for Ukraine, however Belgium, where the majority of the assets are stored, has shared concerns about the plan’s legality. Russia has previously hit out at the scheme as “theft”.
“Now we have a simple choice – either money today or blood tomorrow,” Tusk said on Wednesday. “And I am not talking about Ukraine only I am talking about Europe. This is our decision to make and only ours.”
Ukrainian president Volodymyr Zelensky is expected to attend the summit in person and has called on Ukraine‘s allies to show a united front against Russia.
The Ukrainian president urged European leaders to secure support for Kyiv and show Russia that continuing its war is “pointless” ahead of the summit in Brussels today.
“The outcome of these meetings, the outcome for Europe, must be such that Russia feels that its desire to continue fighting next year will be pointless, because Ukraine will have support,” Zelensky said in his evening address on Wednesday.
The European Union is set to vote on a historic proposal to use billions in frozen Russian assets to fund Ukraine on Thursday.
It comes at a critical juncture in peace talks, after president Vladimir Putin called European leaders “little pigs” on Wednesday and US president Donald Trump accused the continent of showing weakness.
Europe has floated an unprecedented plan to raise £80bn out of a total of £250bn in frozen Russian assets for Ukraine to support its war effort and, in turn, put pressure on Putin to end the war.
Our foreign news reporters James Reynolds and Maira Butt report:
Volodymyr Zelensky has now warned that frozen Russian assets must not be allowed to be used by Moscow to its political advantage.
“Money is needed so that Russia and anybody else doesn’t use these Russian assets as a leverage against us,” he said.
He adds that it is vital to stop these assets being used as a part of Russia’s negotiation tactics, such as by offering access to the US.
Zelensky also spoke on the importance of security guarantees.
“I believe that the end of the war in general is connected with security guarantees, because without security guarantees it doesn’t mean there will be an end.”
Russia “will come” again without guarantees that “speak to everybody”, including Ukrainian people who want to return, investors, tourists, and so on.
Ukraine will be forced to cut funding for drones if it does not receive a tranche of EU funding by Spring, Zelensky has warned.
Drones are a critical element of Ukraine’s defence, used for both attack and reconaissance purposes.
Drone warfare has been a central feature of the war between Russia and Ukraine.
Zelensky is now speaking to a media conference in Brussels.
Ukraine is counting on a positive decision from the EU on the frozen Russian assets, he says.
The signals from Russia, he says, show that Moscow is definitely not interested in peace with Europe.
He says there is a unified position that Ukraine needs to understand what Kyiv’s financing situation will be next year – and says that as it stands the foreign aid deficit will be at 45 billion to 50 billion Euros next year.
Russia’s central bank said on Thursday that it will sue European banks in a Russian court over attempts to use frozen Russian assets to finance Ukraine.
Under international law, sovereign assets cannot be confiscated, so the European Commission has put forward a plan to allow EU governments to use up to 165 billion euros – most of the 210 billion euros worth of Russian sovereign assets currently frozen in Europe – without confiscating them.
EU countries have to share the risk of the entire frozen Russian asset loan project, if it is approved.
The main risk is a scenario under which the EU has to return the cash to Russia but Russia has not yet paid the war reparations to Ukraine. Kyiv only needs to pay back the loan if Russia pays reparations.
Under this scenario, the EU would be left liable for the amount that has been transferred to Ukraine.
EU governments agreed on December 12 that the immobilised Russian assets will stay frozen indefinitely, removing a serious risk that during one of the votes that take place every six months to keep the money frozen, which requires unanimity, one country could break ranks with others and force the EU to release the money to Moscow.
With the risk of an “accidental” lifting of the sanctions removed, the risk to EU governments is very small because their guarantees would only be called upon if EU governments themselves decide to unfreeze the Russian assets before Russia pays war damages to Ukraine.
The EU froze €210bn (£184bn) of Russian assets following Vladimir Putin’s invasion of Ukraine in February 2022.
Nearly four years on, the EU wants to use this money to generate a loan for Ukraine.
Under the plan, the EU would borrow from Euroclear – a Brussels-based financial company where the assets are held – to provide a €90bn (£79bn) loan, covering around two-thirds of Kyiv’s funding needs for 2026 and 2027.
Ukraine’s other allies would provide the rest, the EU expects.
The money would be repaid to the EU by Ukraine only if Russia agreed to pay reparations for the war. The EU would then repay the money back to Euroclear. Moscow, meanwhile, would still be the legal owner of the assets.
The European Union imposed sanctions on 41 more ships in Russia’s shadow fleet, taking the total of designated vessels to almost 600.
The ships are now banned from entering EU ports and can no longer receive a broad range of services related to maritime transport, the EU Council said.
The EU has imposed 19 packages of sanctions against Russia so far, but Moscow has managed to adapt to most measures and is still selling millions of barrels of oil to India and China, albeit at discounts to global prices.
Much of this is shipped using a so-called shadow fleet of vessels operating outside of the Western maritime industry.
The EU on Monday already adopted sanctions targeting Russia oil traders Murtaza Lakhani and Etibar Eyyub for enabling Moscow to circumvent Western sanctions on crude exports that help to fund Russia’s war in Ukraine.
The frozen Russian asset loan is the “latest test” on whether Europe can respond appropriately after previous failures to take the Russian threat seriously, an analyst has warned.
The frozen assets no longer have any economic significant to Russia and are now “an instrument by which Russia can demonstrate Europe’s inability to take its security challenges seriously”, said Keir Giles, an expert on the Russian military and associate fellow of the Russia and Eurasia Programme at Chatham House.
“This is the latest test for Europe in terms of whether they can respond appropriately to the looming threats that an increasing number of European leaders and defense chiefs are describing from Russia, or whether they will once again fail to respond appropriately to the challenge that they are describing,” he added.
“Unless and until Europe addresses this problem, it will be yet another means by which it has let down not only Ukraine, but also the future of its own populations.”
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