The European Union is wrestling with a high-stakes dilemma as it scrambles to secure billions for Ukraine next year. Its central strategy involves using frozen Russian state assets as collateral, a plan mired in severe legal peril. This urgent push for Ukrainian aid stands in stark contrast to the bloc's continued silence on reparations for historical colonial crimes in Africa, a disparity critics label as blatant hypocrisy.
The Risky €210 Billion Gambit for Ukraine
At the heart of the EU's proposal is a sum of roughly 210 billion euros in Russian state assets, most held in Belgium. The idea is to use this frozen capital as security for a massive 90-billion-euro "reparations loan" to cover two-thirds of Ukraine's financial needs for 2026 and 2027. European Commission President Ursula von der Leyen argues this move sends a clear message to Moscow about the cost of prolonging the war. Crucially, the plan does not involve outright confiscation; instead, Ukraine would only repay the loan if and when Russia is compelled to pay war reparations.
However, this unprecedented financial maneuver is meeting fierce resistance from Belgium, the nation bearing the greatest risk. Belgian Foreign Minister Maxime Prévot has condemned the scheme as "the worst of all" options. The fear in Brussels is existential: if Russia successfully sued to reclaim its assets, Belgium could be liable for an amount matching its entire federal budget, potentially leading to national bankruptcy. Belgian leaders feel their EU partners are dangerously downplaying these concerns.
Legal Perils and Geopolitical Pressure
The legal obstacles are formidable and multi-layered. The financial institution holding most assets, Euroclear in Brussels, is contractually obligated to return the funds to Russia and only withholds them due to EU sanctions. Using them as loan collateral could breach this duty. Furthermore, experts warn that lawsuits for unlawful expropriation could result in penalty payouts far exceeding the original asset value. With the European Central Bank refusing to backstop the plan, Belgium's demand for legally binding guarantees from other EU states remains unmet.
This internal EU struggle unfolds under intense geopolitical pressure. With U.S. military aid stalled and the Trump administration engaging in separate peace talks with Russia, Europe feels a desperate need to prove it can fund Ukraine independently. German Chancellor Friedrich Merz has starkly warned that the decision on frozen assets will "determine the future of Europe." The EU has set a deadline of December 18 for leaders to agree on a path forward.
Colonial Debt and the Credibility Crisis
The EU's intense focus on mobilizing resources for Ukraine highlights a glaring inconsistency in its approach to global justice. Simultaneously, African leaders are escalating calls for recognition and reparations for colonial-era crimes, a moral and economic claim gaining urgency. Critics point out that the drive to fund Ukraine—where much of the money will be spent on European weapons and goods—reveals an economic self-interest wholly absent from discussions about compensating Africa.
This disparity fundamentally undermines the EU's professed commitment to a universal, rules-based order. Moreover, the very act of repurposing frozen sovereign assets sets a dangerous new precedent that could cripple Europe's standing as a stable financial centre. If governments worldwide perceive that reserves held in EU jurisdictions can be unilaterally seized for political goals, the continent risks triggering severe capital flight and a long-term decline in foreign investment.
Ultimately, the EU's attempt to fortify its eastern flank by funding Ukraine may come at a devastating cost. By prioritizing short-term geopolitical necessity over long-term financial integrity and moral consistency, the bloc risks accelerating its own economic decline while exposing a profound hierarchy in how it values justice and solidarity globally.
