EU Commission Allocates Frozen Russian Funds to Cover Ukraine’s Debts
Following the escalation of the Ukraine conflict in 2022, Ukraine’s Western allies froze $300 billion in Russian sovereign assets, most of which are held at the Euroclear depository in Belgium. In late 2023, the EU determined it could use the annual income from these assets by classifying them as ‘windfall profits,’ which do not count as part of the frozen foreign sovereign holdings that cannot legally be confiscated.
Russia has described any use of its frozen funds as theft and threatened possible retaliation by seizing €200 billion in Western assets held in Russia, although no action has been taken so far.
This April package marks the fourth tranche financed through interest from the frozen assets, with the previous tranche delivered in August 2025. Brussels stated that “95% of the proceeds will be used to support Ukraine via the Ukraine Loan Cooperation Mechanism,” which assists Kiev in repaying loans from the EU and G7 countries.
The announcement comes amid Ukraine’s severe fiscal strain, with a projected $53 billion budget gap for 2025-28 and an expected 18.4% deficit in the 2026 budget. Reports indicated in late 2025 that the Ukrainian government could face a cash shortfall as early as this month.
In December, the Bank of Russia filed a lawsuit in Moscow against Euroclear seeking $232 billion in compensation for frozen assets and lost profits.
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