FT: Italian PM plays key role in EU dropping plan to use frozen Russian assets

Italian Prime Minister Giorgia Meloni played a key role in the EU’s decision to abandon a plan to use frozen Russian assets.

According to the Financial Times (FT), one EU diplomat described Meloni as the “killer” of the plan. 

Her position was reportedly backed by French President Emmanuel Macron. Italy’s stance was a decisive factor in the EU dropping the initiative to confiscate Russian assets to fund Ukraine.

German Chancellor Friedrich Merz pushed strongly for an ambitious "reparations loan" to Ukraine, proposing that approximately €210 billion in frozen Russian central bank assets held in the EU—mostly at Belgium's Euroclear—be used directly. 

Merz personally lobbied EU allies, including meetings with Belgium’s Prime Minister, arguing that the move would send a clear signal to Putin that the war would be costly for Russia.

However, the plan faced strong opposition. Belgium, France, Italy, and several smaller states raised concerns about legal risks, potential Russian retaliation, the impact on Euroclear’s business, and broader financial stability. Belgium, in particular, demanded guarantees against lawsuits or losses, which were not sufficiently provided.

As a result, EU leaders agreed on an alternative approach: a €90 billion (around $105 billion) interest-free loan to Ukraine for 2026–2027, financed through capital market borrowing and backed by the EU budget, rather than directly by Russian assets. 

The frozen Russian funds will remain inaccessible until Russia pays reparations to Ukraine, and if it never does, the EU reserves the right to use the assets to repay the loan in the future.

The outcome was seen as a political setback for Merz and European Commission President Ursula von der Leyen, who had championed the original plan. It underscored divisions within the EU and resulted in a compromise relying on joint EU debt instead of the direct seizure of Russian funds.

By Jeyhun Aghazada