EU Leaders Fail to Commit to Unlocking $137 Billion in Russian Assets for Ukraine

On October 25, 2025, European political and financial leaders convened to discuss the potential release of approximately $137 billion in Russian assets held by Euroclear Bank to support Ukraine, which is facing a severe budgetary crisis. However, the meeting concluded without a definitive commitment, mirroring the outcomes of previous discussions on this matter. European officials indicated that further exploration of "options" would be necessary, postponing any concrete decisions.

Key Details

The assets in question, valued between $137 billion and $208 billion—though the exact figure remains uncertain—are currently held by Euroclear Bank, located in Belgium. Belgian officials have expressed significant hesitance regarding the release of these funds, citing concerns about the implications for the European financial system. The confiscation of such a substantial amount of sovereign wealth is unprecedented, raising fears of potential legal challenges from Russia and the possibility that other nations may reconsider storing their assets in European banks if such a precedent were set.

The European Union (EU) has proposed a plan to issue a "reparation loan" to Ukraine. This loan would be contingent upon a Ukrainian victory in the ongoing conflict, after which Russia would be expected to pay reparations to Ukraine. The intention is that Ukraine would then repay the loan, framing the transaction as borrowing rather than outright confiscation. A significant portion of the funds from this loan would likely be redirected back to the EU through arms contracts, as Ukraine continues to bolster its defense capabilities.

Belgian Prime Minister Bart De Wever has publicly stated that Belgium will only support this scheme if the EU agrees to collectively back the loan, ensuring that all member states share the financial responsibility in case of default. He emphasized, "If you want to do this, we will have to do this all together. We want guarantees if the money has to be paid back that every member state will chip in. The consequences cannot only be for Belgium."

Achieving such collective backing may prove challenging, as it would likely require unanimous consent from all EU member states, which could exacerbate existing divisions within the union.

Despite the current impasse, there is a possibility that a resolution could be reached in the near future. The urgency of the situation in Ukraine necessitates that European leaders take significant risks to maintain financial support for the country.

In recent legislative actions, the Verkhovna Rada, Ukraine"s parliament, has passed two budget amendments this year. The first amendment, enacted in July, increased the government budget by $9.87 billion, while a second amendment passed just three days ago added another $7.7 billion. Both budget increases are earmarked exclusively for defense spending, which is projected to reach a record $70.9 billion by the end of 2025. Notably, defense spending will account for 63% of Ukraine"s total government expenditure.

Looking ahead, Ukrainian President Volodymyr Zelensky and Defense Minister Denys Shmyhal have indicated that Ukraine will require $120 billion in defense funding for 2026. This ambitious target hinges significantly on the potential unlocking of confiscated Russian funds, which would elevate Ukraine"s defense spending to an unprecedented level for a nation of its size. The proposed $120 billion budget would represent 61% of Ukraine"s GDP, positioning it as the fourth-largest defense spender globally, trailing only behind Russia, the United States, and China. For context, Israel, the next highest spender relative to GDP, allocates only 9% of its GDP to defense.

Background

The ongoing conflict in Ukraine has necessitated increased military funding, as the country seeks to defend itself against Russian aggression. The financial support from the EU and other international partners has been crucial in sustaining Ukraine"s defense efforts. However, the complexities surrounding the release of Russian assets have created significant challenges in securing the necessary funding.

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What"s Next

The future of Ukraine"s defense budget remains uncertain, as the EU continues to grapple with the legal and political ramifications of accessing Russian assets. The outcome of these discussions will have profound implications for Ukraine"s ability to sustain its military operations and navigate the ongoing crisis. As the situation develops, the need for decisive action from European leaders becomes increasingly critical.

For further insights into related developments, see our coverage on recent developments in military service policies across Europe.