‘It’s theft’: Russia threatens retaliation if Europe unlocks $165 bn frozen fund to aid Ukraine

The Kremlin has warned of taking action against countries and individuals who unlock $165 billion of the Russian assets fund to aid Ukraine after European leaders convened a meeting to discuss the proposal of lending the amount to Kyiv.

Kremlin spokesman Dmitri S Peskov saw no difference between outright confiscating frozen Russian assets and the proposal by top European leaders to use those assets as collateral for a loan to Ukraine without formally seizing them. “We are talking about theft,” he told reporters.

Since US military financing for Kyiv is ending and many EU governments face fiscal struggles, the European Commission has proposed that the EU use the cash balances from frozen Russian central bank securities to support Kyiv in 2026 and 2027.

On the other hand, Russian President Vladimir Zelenskyy signed a decree yesterday to steadfast the redistribution of its assets within the country. Analysts have told the New York Times that Moscow could respond to Europe’s plan by seizing the assets of foreign companies and individuals from nations backing the loan.

‘We need more structural support’

The European Commission’s president, Ursula von der Leyen, said earlier this week, “We need a more structural solution for military support. This is why I have put forward the idea of a reparations loan that is based on the immobilised Russian assets.”

She explained that the loan would be disbursed in stages and would not require the direct confiscation of Russian assets. The Group of Seven has already extended a loan to Ukraine using the interest generated from those frozen assets as collateral.

Ukraine would only repay the loan once Russia pays war reparations for the damage it has caused since its 2022 invasion of the country. This would allow Ukraine to use the money now, rather than wait until Moscow pays up.

‘We’ll go to all the courts’

Russia has not welcomed Europe’s plan to use its assets to help Ukraine’s cause. Dmitri A. Medvedev, deputy chairman of the Russian national security council, said last month that Russia would go after the Europeans “in all possible international and national courts” and also, “in some cases, even out of court.”

According to Russia’s Finance Ministry in 2022, approximately $300 billion in Russian sovereign assets, frozen by Western countries and primarily held in the European Union and the United Kingdom, account for nearly half of the Russian Central Bank’s gold and foreign currency reserves. These assets were frozen shortly after Russia launched its full-scale invasion of Ukraine.