EU Floats Resurrecting Plan to Tap Frozen Russian Assets for Ukraine

(MENAFN) European Union foreign policy chief Kaja Kallas has floated reviving a previously shelved proposal to deploy frozen Russian sovereign assets for Ukraine, after Hungary torpedoed a €90 billion ($106 billion) loan to Kyiv on Monday.

The veto has reignited a contentious debate over how best to channel financial support to Ukraine as the war grinds on — and whether Moscow's immobilized funds should be the answer.

"If [the loan] doesn't work, we can always go back to using the frozen assets," Kallas told journalists on Monday, as cited by Euroactiv, calling it the EU's original "plan A."

Western governments locked up approximately $300 billion in Russian central bank reserves following the escalation of the Ukraine conflict in 2022, with the bulk held at Euroclear, the Belgian-based financial depository. A push in December to leverage those funds as collateral for a so-called reparations loan collapsed after Belgium and several other member states objected. The bloc instead settled on a compromise — financing Kyiv through jointly issued debt, underpinned by the EU budget.

That arrangement now hangs in the balance after Budapest exercised its veto, accusing Kyiv of deliberately severing oil supplies to Hungarian territory.

Oil Pipeline Row Fuels Political Standoff
At the heart of the dispute is the Soviet-era Druzhba pipeline, which transports Russian crude to Hungary and Slovakia and has been offline since late January. Kyiv maintains the interruption was caused by Russian sabotage — a claim Moscow denies. Hungary, Slovakia, and Russia counter that Ukraine is deliberately withholding supplies as a political maneuver.

Ukrainian President Volodymyr Zelensky on Tuesday called on EU legislators to unblock the stalled loan. Budapest has made its position clear: the veto stays unless oil flows resume.

Russia Fights Back in the Courts
Moscow has mounted an aggressive legal counteroffensive against any attempt to seize its frozen reserves, branding such moves outright theft and threatening sweeping retaliation. In December, Russia's Central Bank filed a $232 billion lawsuit against Euroclear in a Moscow court, seeking recovery of both frozen assets and lost profits. Euroclear now reportedly faces more than 100 separate legal actions in Russian courts.

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