DEAR READER,

The much-anticipated Trump-Zelenskyy meeting did not exactly go as Kyiv hoped. Just a day earlier, Trump was on the phone with Vladimir Putin, after which he promptly announced a follow-up meeting with him in Budapest. According to a Financial Times article, during the meeting in the US, Zelenskyy was pressed to accept Russia’s terms “or be destroyed.” Chillingly enough, this is almost the exact plot of Carlo Masala’s new book If Russia Wins, where Ukraine is forced into surrender and Russia pushes further, right into NATO territory. It is a grim but brilliant read, and we cannot recommend it enough.

If you enjoy thought-provoking reads like this, we have just created the Brief’s reading list. You can access it through our referral programme: simply invite one friend, and you will unlock our curated selection of essential articles, books, podcasts, videos, and more. It will help you to stay sharp on the region’s biggest stories. You will find all the details at the very bottom of this newsletter. (And also stay tuned: we will soon drop a podcast episode with Masala himself).

In this week’s expert opinion, Liza Bezvershenko breaks down the debate over Russia’s frozen assets: €260 billion globally, with €210 billion held in the EU, and how (or if) they could be used for Ukraine’s reconstruction.

Enjoy reading this week’s “brief”!

— Giorgi Beroshvili, Editor

Since Russia’s full-scale invasion of Ukraine in February 2022, the international community has responded with a broad package of economic sanctions, including a ban on all transactions involving the assets of the Central Bank of Russia. As a result, around 260 billion euros (300 billion US dollars) of these assets worldwide are currently frozen – immobilized – with about 210 billion euros held within the European Union. Of that, about 185 billion euros sits in Euroclear, a major international securities depository and clearing house based in Belgium.

With Ukraine’s defence costs exceeding 100 billion euros a year and US support declining under the Donald Trump administration, the search for new financing sources is more urgent than ever - especially as Russian drone, air, and naval incursions against Europe intensify by the day. In response, the European Commission president, Ursula von der Leyen, announced a new “reparation loan” during her State of the Union speech on September 10th. The plan aims to unlock 185 billion euros in frozen Russian central bank assets for Ukraine’s war efforts and reconstruction, without directly “touching” the assets themselves. The proposed mechanism will involve Euroclear lending an equivalent amount to a European entity, which would then provide loans to Ukraine. Ukraine would only reimburse them once Russia fulfils the reparations obligations.

The initiative has won strong backing from Germany, Finland, Sweden, Poland, and the Baltic states. Yet some remained cautious – and, as always there is a looming risk of Hungary and Slovakia blocking unanimity. Belgium, home to the bulk of immobilized funds, plays a pivotal role. While Prime Minister Alexander De Croo previously opposed any unilateral move, he has recently shown openness provided “key questions are answered” and adequate risk insurance is in place. Belgium insists that any scheme must ensure fair burden-sharing among EU members and coordination with international partners. And the European Commission is expected to develop a plan which would help spread the liability amongst the member states.

From a legal perspective, there are plausible pathways for asset confiscation as a countermeasure to internationally wrongful acts. Ukraine’s right to compensation is widely recognized and reaffirmed by UN General Assembly Resolution ES-11/5. Given that Moscow is unlikely to pay reparations voluntarily when the war ends, frozen Russian assets may be the only viable source of funding to cover the vast destruction in Ukraine. Opponents, however, warn that seizing sovereign assets risks violating principles of sovereign immunity, codified in UN conventions and national laws.

Economically, the European Central Bank has cautioned that confiscating Russian assets could undermine confidence in the euro and threaten the stability of the European financial system. Yet multiple studies suggest those fears are over exaggerated. The assets have already been frozen since 2022, and the euro’s share in global reserves has remained stable.

Politically, the EU had already taken a precedent-setting step by agreeing to use the windfall profits generated from frozen assets to finance a 50 billion US dollar G7 loan to Ukraine in 2024. Still, fears linger over Moscow’s reaction, with Kremlin spokesman Dmitry Peskov denouncing such moves as “theft”. But as Russia intensifies its hybrid warfare against EU member states, the issue of frozen Russian assets has become a matter of European security itself – where inaction will be costly.

Despite options present on the table, Europe’s political voice remains fragmented, trapped in bureaucratic hesitation. As of December 2024, Ukraine’s reconstruction and recovery needs are estimated at 506 billion euros – nearly twice the value of the frozen Russian assets. With reduced financing for Ukraine from the US, the urgency for Europe to take decisive action is clear. Europe now bears the military, political, and financial bill of the war – and must find new, creative ways to sustain its defence against Russian aggression.

The moral and strategic case is clear: it should be Russian taxpayers’ and oligarchs’ money that pays for the devastation of Ukraine – not Europe’s. The question is whether the EU will find the strength and unity to make Russia pay.

— Liza Bezvershenko, Civil Society and Advocacy Expert

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