Using Russian assets for Ukraine loan ‘increasingly difficult’, says EU’s Kallas

The European Union’s efforts to support Ukraine through the use of frozen Russian assets are facing mounting challenges, according to European Commissioner for Economic Affairs, Liina Kallas. As the war in Ukraine continues to devastate the region, the EU has been exploring innovative avenues to fund reconstruction and humanitarian aid. One such avenue—leveraging Russian state-held assets frozen under sanctions—was initially seen as a promising solution. However, Kallas’s recent statements highlight the complex legal, logistical, and political obstacles that make this approach increasingly difficult.

Background: The Ukrainian Financial Crisis

Since Russia’s invasion of Ukraine in 2022, the Ukrainian economy has suffered massive disruptions, including the destruction of infrastructure, displacement of millions, and a sharp decline in industrial output. To stabilize the country and fund reconstruction, the Ukrainian government has requested international loans and financial assistance. The European Union, alongside the United States and other allies, has pledged billions in support.

Amid these efforts, frozen Russian assets—estimated in the tens of billions of euros across EU banks—have been proposed as a potential source to finance Ukraine’s recovery. These assets, including state funds, corporate holdings, and personal wealth linked to Russian officials, were seized following international sanctions aimed at pressuring Moscow to cease hostilities.

Kallas Speaks on the Challenges

During a press briefing, Kallas noted that while the concept of using frozen Russian assets for Ukraine’s loans is attractive, it faces “increasingly difficult” hurdles. She highlighted three main challenges:

1. Legal Complexity:
Many of the frozen assets are tied to Russian entities or individuals with legal protections. Redirecting these assets to Ukraine could trigger lengthy legal disputes in European courts, both domestically and internationally. Some assets are also held in private accounts, raising questions about property rights and compensation claims.


2. Political Sensitivities:
Using seized foreign assets for war funding sets a precedent in international relations. While public opinion in the EU largely supports Ukraine, Kallas warned that member states may hesitate, fearing diplomatic backlash or retaliation from Russia.


3. Administrative and Logistical Barriers:
Even if legal and political obstacles are overcome, there are practical challenges in converting frozen assets into usable funds for loans. Issues such as currency conversions, banking restrictions, and compliance with EU financial regulations complicate the process.



EU’s Commitment to Ukraine

Despite these difficulties, Kallas emphasized that the EU remains committed to supporting Ukraine, both financially and politically. The EU has already provided billions in grants, humanitarian aid, and military support, while continuing to impose sanctions designed to weaken Russia’s capacity to wage war.

Kallas stated:
"While using Russian assets may prove complex, it does not diminish the EU’s resolve. We are exploring multiple avenues to ensure Ukraine receives the support it needs to survive this crisis and rebuild its future."

International Reactions

The announcement has drawn reactions from both financial and political circles. Analysts note that while the idea of repurposing frozen assets is appealing, it is fraught with uncertainty and risk. Legal scholars point out that international law typically protects foreign-owned property, even in cases of sanctions, making unilateral transfers difficult.

Meanwhile, Ukrainian officials have reiterated the urgency of funding for reconstruction and civilian support. They stress that every delay in financial aid prolongs the humanitarian crisis and leaves the country vulnerable to further Russian aggression.

Alternative Funding Measures

With the Russian assets route becoming increasingly complicated, the EU is exploring alternative strategies to provide financial support:

Issuing EU-backed loans directly to Ukraine.

Pooling resources from member states through grants and emergency funds.

International bonds and financial instruments to raise capital from global investors.


Kallas suggested that combining these measures with existing sanctions ensures that Ukraine continues to receive robust support without creating legal or diplomatic complications.

Looking Ahead

The situation underscores the delicate balance between using innovative financial measures and respecting legal and political frameworks. While the frozen Russian assets may not immediately provide a solution, the EU’s commitment to Ukraine is clear. Policymakers, economists, and international partners are working tirelessly to ensure that Ukraine receives the necessary funding, even if it requires exploring multiple avenues simultaneously.

As the war continues and reconstruction becomes a pressing priority, the EU’s approach will likely serve as a test case for international responses to conflicts where frozen foreign assets could theoretically be redirected for humanitarian purposes. For now, Kallas’s statements serve as a realistic reminder of the challenges involved in converting rhetoric into actionable financial solutions.