Ukraine has told its Western partners that it needs roughly $27bn (about €24bn) to keep the state running through the coming winter, a shortfall that has reignited a contentious debate inside the European Union about whether to use the frozen reserves of the Russian central bank to bridge the gap.

The request was made public by President Volodymyr Zelensky on Ukraine's Independence Day last month, catching many European officials off guard. With Russian air strikes continuing and Kyiv's own air‑defence capabilities still insufficient, the Ukrainian economy is contracting sharply and ordinary citizens are facing soaring energy bills and food prices.

Frozen assets: how they grew and why they matter

When the EU imposed sanctions on Russia in 2022, it effectively locked away €210bn of assets belonging to the Central Bank of Russia (CBR). The move was meant to prevent Moscow from accessing funds that could finance its war effort. Since then, those assets have generated between €3bn and €5bn a year in windfall profits, which the EU has been passing on to Kyiv as part of a broader aid package agreed with the G7.

In October 2024 the EU began channeling those profits to Ukraine, and by mid‑2025 discussions were under way about turning the frozen stock into a €140bn "reparation loan". The proposal would have required Ukraine to repay the money only if Russia ever paid war reparations, thereby avoiding a direct confiscation that could breach international law.

Belgium, home to the securities depository Euroclear that holds the bulk of the frozen funds, objected strongly. Belgian officials warned that any move to seize the assets could expose Euroclear, and by extension the EU's financial system, to costly legal retaliation from Moscow, as well as to broader financial‑market instability.

Plan B and its limits

When EU leaders could not reach consensus on a full‑scale seizure, they adopted a "Plan B". The alternative involved creating a €90bn fund financed by joint EU borrowing, intended to cover Ukraine's needs for 2026 and 2027. The fund was supposed to be supplemented by contributions from allies such as Canada and Japan, but those pledges have yet to materialise in full.

In June the EU disbursed €3.9bn for drones and air‑defence systems, followed by a further €4.6bn in July. Ukraine now asks Brussels to accelerate the next tranche, roughly €3bn, after the European Council approved the use of funds for Patriot missile batteries.

Some diplomats within the bloc have raised concerns about the efficiency of that spending, questioning whether the money is being directed to the most urgent needs on the ground. The war's cost is rising each year, not only in terms of weapons but also in reconstruction, energy security and the looming winter, which will act as a multiplier for household expenses.

Political currents and the legal maze

The funding dilemma arrives at a time when national budgets across Europe are already stretched and far‑right parties are gaining traction in several member states. In France, for example, a potential Marine Le Pen victory could shift the country's stance on Ukrainian aid after 2027.

Against that backdrop, a coalition of member states, including Poland, Spain, the Netherlands and Sweden, together with a cross‑party group of MEPs, have urged the European Commission to revisit the idea of mobilising the frozen Russian assets.

In August three former senior officials put forward a technical proposal: move the frozen assets from Euroclear into a new EU‑controlled custodian instrument, thereby shielding Belgium from direct legal exposure. They argued that such a transfer could be justified under Article 122(1) of the Treaty on the Functioning of the European Union, which allows the EU to act in the interest of the Union in exceptional circumstances.

Legal scholars caution that even a carefully structured transfer would not eliminate risk. Confiscating central‑bank reserves could trigger lawsuits in multiple jurisdictions and, more critically, undermine confidence in the euro and the broader monetary framework that underpins the single market.

US ambitions and the geopolitics of leverage

Across the Atlantic, former US President Donald Trump has entered the fray with a proposal that would see the frozen assets used for Ukrainian reconstruction under American oversight. In a recent social‑media post, Trump suggested that Europe should repay the US for the aid it has provided to Kyiv, and under his 28‑point peace plan, drafted without consultation with either Ukrainian or European officials, $100bn of the frozen funds would be invested in reconstruction projects managed by the United States, with half of any profits flowing back to Washington.

Trump's plan also envisions a portion of the assets being redirected to joint Russian‑American ventures, a notion that has drawn sharp criticism from European leaders who see it as an attempt to turn Ukrainian aid into a bargaining chip for US geopolitical aims.

What the stakes are for Europe

Using the frozen assets now would give Kyiv a vital lifeline and reduce the immediate pressure on EU budgets, which are already coping with inflation, energy transition costs and the fallout from the pandemic. It would also limit the ability of both Washington and Moscow to wield the assets as leverage in future negotiations.

However, the move would come at a price. A decisive seizure could set a precedent that weakens the principle of sovereign immunity for central banks, potentially prompting other nations to target foreign reserves in future conflicts. Moreover, any legal challenge from Russia could spill over into the European financial system, raising borrowing costs for member states and threatening the stability of the euro.

For European workers and households, the outcome matters directly. If the EU is forced to fund Ukraine through conventional borrowing, taxpayers across the bloc may see higher debt servicing costs, which could translate into reduced public‑service spending or higher taxes. Conversely, a successful mobilisation of the frozen assets could free up fiscal space for social programmes at home, while also reinforcing the EU's credibility as a defender of international law and a supporter of a sovereign neighbour under attack.

Looking ahead

EU leaders are expected to meet in the coming weeks to decide whether to adopt the new custodian‑instrument proposal or to continue relying on the €90bn borrowing plan. The decision will be shaped by legal advice, the intensity of lobbying from member states, and the evolving military situation on the ground in Ukraine.

In the meantime, Kyiv is pressing for the next €3bn tranche to purchase additional Patriot systems, a request that underscores the urgency of securing air‑defence capabilities before the winter months. The European Commission has signalled willingness to accelerate payments, but final approval still hinges on a broader consensus about the fate of the frozen Russian reserves.

Whatever the outcome, the episode illustrates the complex trade‑off facing Europe: balancing the immediate humanitarian and security needs of a war‑torn neighbour against the long‑term stability of its own financial architecture. The choice will reverberate through EU fiscal policy, the credibility of its sanctions regime and the broader debate about how the bloc should respond when a major power uses its financial assets as a weapon of war.