The EU might fund weapon purchases for Ukraine from the US by using frozen Russian assets.

Europe still faces disagreement over using hundreds of billions of dollars in frozen Russian assets, which could serve as a source of aid to Kyiv, which includes the new US military support package. Replacing the military and financial aid previously received from Washington would cost about $45B annually.

One possible solution is to give Kyiv these funds as loans that Moscow can only repay if it provides compensation for war damages. Ukraine’s rebuilding costs are estimated at $524B, so such a scheme could entail using the roughly $300B in frozen Russian assets that are being held in Europe.

Valerie Urben, CEO of Euroclear, Europe’s largest depository, argues that the EU’s plans to invest frozen Russian assets in higher-risk instruments to increase income would be considered expropriation and would greatly raise risks for the depository, which holds €191B in Russian assets. She believes the scheme can only work if “in the event of a request for restitution from the Russian central bank for the missing assets, someone will cover this amount”.