BRUSSELS, Dec. 18 (Xinhua) -- EU leaders are meeting in Brussels from Thursday to Friday for a European Council summit, sparking once again heated debate among member states.
One of the most closely watched items is whether the bloc can move beyond tapping interest from frozen Russian assets and start leveraging the principal to support Ukraine. The debate has run for years, but why does the EU still hesitate at this moment?
HOW MUCH HAS BEEN FROZEN
After the Ukraine crisis escalated in February 2022, Western countries moved to freeze roughly 300 billion U.S. dollars in overseas assets belonging to Russia's central bank, with most of that amount located in Europe. European Commission data put the total frozen inside the EU at about 210 billion euros (about 246 billion U.S. dollars).
Around 90 percent of the frozen assets in the EU are held via Euroclear, the Brussels-based international central securities depository. The pool generates about 3 billion euros in interest per year.
In May 2024, the Council of the EU adopted a package enabling the net proceeds generated by immobilized Russian assets to be used to further support Ukraine, including support for Ukraine's defense industry and reconstruction.
In June 2024, G7 leaders agreed to provide Ukraine with a 50-billion-U.S.-dollar loan backed by the proceeds generated by frozen Russian assets. Since then, the EU's internal debate over how to use the assets, and how far it can go beyond, has continued to intensify.
WHAT IS EU WORRIED ABOUT
Analysts say the bloc's reluctance to take what some describe as a more "radical" step reflects two core concerns: crossing legal red lines and risking financial instability.
First comes the legal issue. Directly confiscating the principal would be difficult to justify under established legal practice and could set a precedent that policymakers fear may be hard to contain.
European Central Bank President Christine Lagarde has repeatedly urged the EU to respect international law and warned that the euro's global standing could be damaged.
Second is the fear of knock-on effects in markets. Analysts note that the move could trigger broader doubts about Europe as a safe jurisdiction for reserves and cross-border holdings. That, they warn, could prompt a large-scale capital exodus and ultimately undermine the euro's role as a reserve currency.
A further complication is retaliation risk. Russia's central bank filed a lawsuit against Euroclear this week, sharpening concerns that Russia could seek to seize or immobilize remaining Western-linked assets in Russia as compensation. Such tit-for-tat dynamics could leave European companies and financial institutions facing a higher risk of stranded assets.
"Using frozen Russian assets is legally complex and politically sensitive," commented Fabian Zuleeg, chief economist at the European Policy Center. He added that with Ukraine's needs growing, budgets constrained, and public support unable to be stretched indefinitely, the issue is becoming increasingly difficult for Europe to avoid.
WHO SUPPORTS IT, WHO OPPOSES IT
With many EU member states reluctant to rely on national budgets to sustain support for Ukraine, the argument over whether to use frozen Russian assets has grown intense both inside the EU and across the Atlantic.
U.S. outlet Politico has reported that the U.S. government opposes the plan to fund Ukraine by using frozen Russian assets and has urged Italy, Bulgaria, Malta, and the Czech Republic to join that stance.
Within the EU, Hungarian Prime Minister Viktor Orban has said the bloc must do everything possible to avoid using Russian assets, while Slovakia has taken a similar position. Belgium, where Euroclear is headquartered, has been another key opponent, citing concerns about retaliation and the prospect that it could end up carrying disproportionate legal and financial exposure.
Supporters of the plan, including European Council President Antonio Costa and European Commission President Ursula von der Leyen, have sought to align member states ahead of the summit in hopes of achieving a breakthrough.
Ahead of the meeting, the EU decided to keep Russia's assets in the EU frozen, linking the duration to the end of the conflict and compensation for damage. Previously, the EU's asset-freeze measures were renewed every six months, requiring unanimous approval by all 27 member states each time. (1 euro = 1.17 U.S. dollars) ■
