Russia's frozen assets become key bargaining chip in Ukraine peace negotiations

For Europe, money is as crucial to Ukraine's survival as weapons and intelligence. But the EU's most realistic funding solution relies on accessing billions of dollars in frozen Russian assets - the same assets US President Donald Trump has suggested taking control of.

An early draft of Trump's 28-point peace proposal envisioned a reconstruction fund for Ukraine managed by the US, financed by $100 billion in frozen Russian assets and matched by another $100 billion from the European Union - with half of the profits flowing back to Washington.

The idea caught European officials off guard, especially after years of internal arguments over what to do with Russia's immobilized financial reserves.

These assets form the backbone of European Commission President Ursula von der Leyen's strategy to tighten pressure on Moscow and boost support for Ukraine, even as unexplained drone incidents and sabotage make governments across Europe uneasy.

"I cannot imagine a future where European taxpayers foot this bill alone," von der Leyen told lawmakers in Strasbourg on Wednesday, drawing applause.

The EU has already committed close to $197 billion to Ukraine since Russia's invasion in 2022. While countries remain divided on new funding, nearly all agree on tapping Russian assets to meet Kyiv's projected $153 billion budget and defense needs for 2026–27. Most of those assets - worth about $225 billion - sit at Euroclear, a major financial clearinghouse in Brussels.

A plan with perks - for Washington

Trump's assertive style has left many EU officials convinced the US wants a fast settlement that leaves Europe to finance and facilitate it, while the US benefits financially. Analysts describe the initial proposal as a US attempt to seize control of the assets just as Washington and Brussels reopen trade talks.

Agathe Demarais of the European Council on Foreign Relations compared the idea to a "signing bonus" for a peace deal leaning heavily in Moscow's favor. Fabian Zuleeg of the European Policy Centre called the proposed US takeover "outrageous," though he noted Europeans might still accept it "if that's the price of a genuinely good agreement."

Following high-level discussions among the US, Germany, France, the U.K. and the European Commission, the investment scheme was removed from the latest draft. Russia has already dismissed the new version outright.

Belgium's pivotal role

Experts say the EU could strengthen its negotiating leverage by moving quickly to claim the frozen assets before Washington intervenes.

"If the EU acts first, it may sharply reduce Trump's appetite for a poor-quality deal," Demarais argued.

Von der Leyen's Commission wants the EU to take legal ownership of the assets and issue Ukraine a loan to be repaid only if Russia pays war reparations.

But much depends on Belgium. Euroclear - where most of the funds are held - is based there, and Belgian Prime Minister Bart De Wever has long refused to approve using the assets as collateral for major Ukraine loans, warning of potential Russian retaliation.

"We are a small country, and retaliation could hit us hard," he said in October.

Belgium's hesitation has also been tied to internal political disputes over high national debt. With a domestic compromise reached last week, EU officials from across the bloc hope De Wever may now soften his stance.

After a meeting in Brussels on Wednesday, Sweden's Foreign Minister Maria Malmer Stenergard stressed urgency: "Time is running out. This is the only realistic financing option that truly matters and the fairest for taxpayers."

EU foreign policy chief Kaja Kallas echoed that sentiment, noting strong support for Belgium. "It would send the clearest message to Moscow that it cannot wait us out. We must act quickly," she said.

EU leaders, including De Wever, will revisit the issue at a 18 December summit in Brussels, where seizing Russia's frozen assets will be a major topic of debate.