Why Does Europe Delay a Decision on Using Russia’s Frozen Assets?

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As Russia continues its grinding offensive and Ukraine braces for another winter of war, the European Union remains paralysed over a seemingly straightforward decision: whether to use 140 billion euros (A$250 billion) in frozen Russian assets to support Kyiv.

Officially, the delay is about legal caution and financial liability.

But beneath the surface, a more uncomfortable truth is emerging: some EU leaders may no longer believe Ukraine can win.

This isn’t about public rhetoric. Most European heads of state still affirm their support for Ukraine’s sovereignty and territorial integrity.

But when we examine strategic behaviour – especially the hesitation to deploy high-risk financial tools, such as using Russia’s frozen assets in Europe – we see signs of realist recalibration.

The EU’s frozen assets debate has become a litmus test for Brussels’ confidence in Ukraine’s long-term viability.

Belgium holds the bulk of Russia’s frozen assets, amounting to about 210 billion euros ($374 billion) in a financial institution called Euroclear. European finance ministers have discussed using the assets as a loan to Ukraine, which would only be repaid if Russia provided reparations following the war.

Brussels is insisting on legal guarantees before releasing the funds. It is also demanding collective liability shielding from other EU states, citing concerns about lawsuits filed by Russia and financial exposure.

There’s a reputational risk, as well, if other countries such as China or India start to view European banks as an unreliable place to park their funds.

In parallel, Slovakian Prime Minister Robert Fico has suspended military aid to Ukraine and said his country’s goal is not Russia’s defeat, but to “end war as soon as possible”.

Hungarian Prime Minister Viktor Orbán has gone further, saying Ukraine “cannot win on the battlefield”.

Although Fico and Orbán are more pro-Russia than other EU leaders, they reflect a growing undercurrent of realist strategic thinking within the bloc.

Even among more supportive states, there is growing ambiguity about the war effort. France and Germany continue to support Kyiv, but with increasing emphasis on diplomacy and “realistic expectations.”

And while Poland and the Baltic states are the most vocal supporters of using Russia’s frozen assets, Germany, France and Italy have adopted a more cautious posture or demanded Ukraine commit to spending the assets on European weapons – a demand Kyiv resists.

Unavoidably, these frozen assets are not merely financial – they are a geopolitical wager. To deploy them now is to bet on Ukraine’s victory. To delay is to preserve flexibility in case Russia prevails or the war ends in a frozen stalemate.

In 2022, supporting Ukraine was framed as a moral imperative. By late 2025, some now see it as a strategic liability.

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As is invariably the case in international politics, moral aspirations give way to strategic imperatives when the geopolitical push comes to shove. As war fatigue is rising across Europe, many Ukrainians are wondering if Europe still cares.

These concerns are amplified by the shifting battlefield: the key transit city of Pokrovsk in eastern Ukraine is under siege and Russian forces are advancing in Huliaipole in the south. Ukraine’s energy infrastructure is being systematically dismantled by Russian drone strikes.

This also explains the hesitance of EU leaders about releasing Russian frozen assets. Aside from the legal concerns, questions are increasingly being asked about the trajectory of the war. Could the EU risk billions of euros on a failed cause, while forfeiting leverage in postwar negotiations?

From an international politics perspective, this classic realist logic and the widening gap between ethics and interstate relations are neither new nor surprising: states act in their interests, not in service of ideals.

The frozen assets are being treated not as aid, but as a bargaining chip – to be deployed only if Ukraine stabilises the situation on the battlefield or if Russia can be pressured into concession.

By delaying a decision on the frozen assets, the EU preserves optionality. If Ukraine regains ground, the assets can be deployed with stronger justification. If Russia ultimately prevails, the EU avoids being seen as the architect of a failed financial intervention.

This ambiguity is not indecision – it’s strategic posture. The EU is hedging its bets, quietly preparing for multiple outcomes. The longer the war drags on, the more likely unity fractures and realism overtake idealism.

A final decision on the assets is expected in December. But even if approved, the funds may be disbursed in cautious tranches, tied to battlefield developments and political optics, locking Ukraine into the unforgiving calculus of great power rivalry between Russia and the West.

The EU is not abandoning Ukraine, but it is recalibrating its risk exposure. That recalibration is grounded in strategic doubt as EU leaders are no longer sure Ukraine can win – even if they won’t say so aloud.

In the end, whether or not the assets are deployed, Ukraine’s outlook remains bleak unless both Russia and the West find a way to de-escalate their zero-sum rivalry in the region.

Any future settlement is unlikely to be optimal and will likely disappoint Ukrainians. But the current challenge is not to pursue perfect outcomes, which no longer exist, but to choose the least damaging path to ending the war, among all the imperfect options.

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“The Hold-Up of the Russian Assets Can Upend Years of Cooperation Between Europe and All Other Countries”

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European leaders are being urged to decide whether to use Russia’s frozen assets to fund Ukraine’s defence at a time of unprecedented pressure from the US.

At a critical summit in Brussels on Thursday, EU leaders will be asked to make good on a promise to find urgently needed cash for Ukraine, with Kyiv under pressure to cede territory as Russia ekes out advances on the battlefield.

Arriving at the summit, Poland’s prime minister Tusk, said Europe had a choice between “money today or blood tomorrow”.

He said he was “not talking about Ukraine only, I am talking about Europe. And this is our decision to make and only ours. I think all European leaders have to finally rise to this occasion.”

Belgium’s prime minister, Bart De Wever, who is pushing back against a proposed “reparations loan” for Ukraine secured on Russian frozen assets, told reporters his country absolutely needed protection against any counteraction from Moscow.

De Wever said the “the hold-up of the Russian assets can upend years of deepening cooperation between Europe and all other countries”.

Many other member states say this is a non-starter because Hungary has already said it would veto such a plan.

Merz, a strong advocate of the frozen assets plan, said he believed the EU could find an agreement. “I understand the concerns by some member states, particularly by the Belgian government, but I hope that we can address them together.”

The European Commission president, Ursula von der Leyen, said she would not leave the summit without a solution. “I totally support Belgium,” she added.

Von der Leyen said Europe must take responsibility for its own security in a world she described as “dangerous and transactional”, adding: “This is no longer an option. It is a must.”

Earlier this month, von der Leyen proposed two options to fund Ukraine’s urgent defence and civilian needs in 2026 and 2027: joint EU borrowing or a so-called “reparations loan” secured against Russia’s frozen assets in the bloc.

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Belgium, which hosts most of the €210bn immobilised Russian assets in the EU, says it lacks sufficient guarantees that member states would come to its aid if the scheme were to fail, leaving Brussels with a multibillion-euro bill.

The Russian central bank announced this week that it was seeking $230bn in damages against Euroclear, the Brussels-based securities depository that holds most of Russia’s sovereign wealth in the EU. Belgium also fears courts in countries allied to Russia will move to seize western assets to enforce claims against Euroclear.

Merz told lawmakers the sum would finance the Ukrainian army for “at least another two years”, while its use would send a clear signal to Putin.

He said he took Belgium’s concerns seriously. “That is why I am trying with our partners to alleviate them,” Merz said – arguing the commission’s plan was “in perfect compliance with international law and international obligations”.

Hungary’s government, which is hostile to Ukraine, has promised to veto any attempt to use the EU budget as collateral for a loan for Kyiv. By contrast, the reparations loan would require only a majority of EU member states, although some diplomats say it would be unthinkable to isolate Belgium.

“A very large majority of member states favour the reparations loan,” one senior EU official said. “Any solution that would require unanimity, I don’t think is realistic so we are back into the reparations loan.”

The EU last week used emergency powers to indefinitely freeze $210bn of Russian assets in the bloc, averting the risk of losing control of the funds if Hungary or any other Kremlin-friendly government vetoed the renewal of sanctions, which have to be renewed every six months.

Belgium has suggested that such emergency powers could also be used to generate an EU loan for Ukraine secured against the budget, circumventing the need for unanimity. But other countries say that would be a legal twist too far.

“This is a non-starter,” said one senior EU diplomat, who nevertheless expressed sympathy for Belgium’s position.

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“Let the Oil Flow!” Who Will Hang Tough at the Last Moment Of the US-Iran Peace Talks?

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A framework peace deal between the US and Iran has been reached, Trump and senior Iranian officials have said, bringing the 15-week conflict to a tentative end and offering hope of relief for the Middle East and the world economy.

The secretariat of Iran’s Supreme National Security Council said war and military operations on all fronts, including Lebanon, would end permanently from Monday night.

The precise terms of the deal remain unclear but in a statement posted to Truth Social on Sunday evening, the US president announced the opening of the strait of Hormuz as well as the removal of the US naval blockade. “Ships of the World, start your engines. Let the oil flow!” he wrote.

Trump later clarified that reopening the strait would depend on the signing of an initial memorandum of understanding on Friday, which Pakistan, acting as mediator, said would take place in Geneva.

Leaked drafts suggest the memorandum will trigger an immediate 60-day period of intensive technical talks, during which the most contentious issues, including Iran’s nuclear programme, will be discussed. Iran’s deputy foreign minister, Kazem Gharibabadi, confirmed that negotiators would seek to reach a broader agreement that would include sanctions relief for Iran.

News of the full reopening of the strait of Hormuz, through which a fifth of the world’s oil and liquid gas pass, sent stock markets higher and oil prices lower on Monday morning. Iran had closed the waterway to most shipping in the early days of the conflict.

Trump will travel to the French Alps on Monday to meet the leaders of Canada, France, Germany, Italy, Japan and the UK at a potentially acrimonious G7 summit.

Trump and other senior officials have repeatedly accused European allies of failing to provide adequate support during the war. Several European leaders, in turn, have sharply criticised his decision-making throughout the conflict.

Vance is expected to attend the signing ceremony. The Iranian delegation is likely to include Mohammad Bagher Ghalibaf, the Iranian parliamentary speaker and lead negotiator, and Abbas Araghchi, the foreign minister.

Shehbaz Sharif, the prime minister of Pakistan and a lead mediator during negotiations in recent months, announced the agreement on Sunday afternoon, saying both sides had declared “the immediate and permanent termination of military operations on all fronts, including in Lebanon”.

Israel has fiercely resisted Lebanon’s inclusion in the deal, where its forces have mounted a sweeping offensive and occupied a swath of land in the south. Trump called for restraint on Sunday after Israel launched fresh airstrikes on Beirut.

Israel braced for retaliatory Iranian missile strikes after its attack destroyed a building in the Lebanese capital’s southern suburbs, killing three and injuring six.

Israeli military officials said the strike targeted senior Hezbollah commanders after the militant Islamist organisation, which has close ties to Tehran, launched three projectiles into northern Israel.

Reports suggested Trump made minor last-minute concessions after the Israeli strike, possibly over the timing of the lifting of the US naval blockade, to allow the deal to go ahead.

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There has been no official response from Netanyahu, who faces a tough battle for re-election this year.

The Israeli prime minister must now explain to voters why so few of the objectives he outlined at the start of the conflict have been achieved.

Israeli officials are also likely to be disappointed that neither Iran’s support for regional militant movements, including Hezbollah, nor its ballistic missile armoury are reportedly on the agenda in negotiations over a final agreement.

The talks are likely to focus on Iran’s nuclear programme, with the US pressing Tehran to dilute its stockpiles of highly enriched uranium stockpiles and accept new restrictions and monitoring measures.

Experts have warned that it is unlikely that a comprehensive agreement on such complex, technical issues will be reached with such a short timeframe, making it likely that negotiations will drag on.

Iran, meanwhile, is keen to secure sanctions relief for Iran and the release of billions of dollars in frozen assets. The US blockade has further damaged the country’s crisis-hit economy, making relief imperative for Iranian policymakers. Inflation has soared and there are shortages of some basic goods.

Other issues could also pose challenges, including disagreements over Iran’s demand to charge de facto tolls – potentially disguised as service fees – on shipping through the strait of Hormuz.

Iran’s Mehr state news agency reported that the memorandum of understanding called for the reopening of the strait within 30 days under “Iranian arrangements”.

The US has long maintained that any tolling arrangements on international shipping – such as those reportedly discussed with Oman – would be unacceptable.

There has also been opposition to the deal in Iran and the US, including from hardline factions linked to Iran’s Islamic Revolutionary Guard Corps, whose influence has grown during the conflict.

While the war has become a political liability for Trump, with polls showing Americans deeply frustrated by rising fuel prices in the run-up to midterm elections in November, some Republicans favour a tougher approach.

The Republican senator Lindsey Graham, a leading Iran hawk, welcomed the deal but said he would be “watching closely” the negotiations on the nuclear programme. “Under our law, any nuclear deal with Iran will be sent to Congress for review and a vote,” he said.

Trump has told the New York Times that if Tehran fails to reach a nuclear deal, it could face renewed military action.

Iran has long maintained that its nuclear programme is peaceful and has not publicly committed to giving up the highly enriched uranium, which is believed to be buried beneath three nuclear sites heavily damaged by US strikes last year.

In a a joint statement, the UK, Germany, France and Italy said they were prepared to lift sanctions on Iran in response to “clear, verifiable steps” to limit its nuclear programme.
Before the deal was announced, a senior Iranian official told Reuters that, under the terms of the draft, the US would agree to release $25bn in frozen Iranian assets.

The Trump administration has previously said any release of Iranian funds would occur only after Iran had met specific conditions under a peace deal.

Thousands of people have been killed in the conflict, most of them in Iran and Lebanon, since US and Israeli forces first attacked Iran on 28 February. Iran retaliated with attacks on Israel and Gulf states hosting US bases, targeting military and civilian infrastructure.

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