EU eyes riskier investments of frozen Russian assets to boost aid for Ukraine

The European Union is considering a controversial new strategy to increase financial support for Ukraine by investing frozen Russian assets in higher-yield, riskier instruments. Nearly €200 billion of Russian state funds, currently immobilized in Belgium, could be transferred into a specially designed investment fund aimed at generating greater returns, four officials familiar with the discussions confirmed.

The initiative is designed to bolster Ukraine’s struggling economy, particularly as concerns grow over a potential halt in US support under President Donald Trump, Caliber.Az reports, citing foreign media.

While the assets were frozen in 2022 following Russia’s full-scale invasion of Ukraine, this plan stops short of outright confiscation—an option resisted by several EU member states, including Germany and Italy, due to legal and financial concerns.

By targeting only the interest generated and preserving the capital, the EU hopes to sidestep accusations of violating international law. “It is important that we hear from the Commission on the available options, especially regarding the potential use of frozen Russian assets and further steps regarding the sanctions regime,” the Polish Council presidency wrote in an invitation to June 19 informal finance ministers’ dinner in Luxembourg.

The EU’s €18 billion share of the G7’s €45 billion Ukraine support package is set to be fully disbursed by year-end, raising urgent questions about how to sustain assistance into 2026. One proposed workaround involves transferring the funds from Euroclear to a “special purpose vehicle” under EU oversight, enabling riskier and more lucrative investments. Euroclear is currently required to place the funds with the Belgian central bank, yielding minimal returns.

In 2024 alone, these low-risk placements generated €4 billion, earmarked for G7 loan servicing. Proponents argue higher returns are essential for long-term support: “The EU has to generate more revenues from Russia’s sovereign funds to bolster Ukraine in the long term.”

Another key objective is to neutralize Hungary’s potential veto of sanctions renewal, which could otherwise result in the assets being returned to Russia. However, critics caution that taxpayers may ultimately bear the cost of any failed investments. With the EU budget strained and new funding unlikely before 2028, officials admit: “It’s not going to be easy to find money under the current MFF [multiannual financial framework].”

By Vafa Guliyeva