Use by the European Union of frozen Russian assets to support Ukraine: an update

By Matthew Parish, Associate Editor

Thursday 12 February 2026

The debate about using frozen Russian assets to finance Ukraine’s war effort has moved from abstract principle to concrete institutional engineering. What began in 2022 as a rapid sanctions reflex — immobilising Russian Central Bank and oligarch assets — has, by early 2026, evolved into a multi-layered project to turn those immobilised funds into a durable source of military and budgetary support for Kyiv, while preserving at least a semblance of fidelity to European and international law.

The European Parliament’s vote of 11 February 2026 to approve a €90 billion loan to Ukraine represents the latest staging point in this evolving story. The measure authorises large-scale Union borrowing to provide macro-financial and defence-related assistance for 2026–27, structured so that repayment may ultimately be linked to reparations owed by the Russian Federation and, in that context, potentially to revenues derived from immobilised Russian state assets held within the European Union, derived from decisions of the International Claims Tribunal for Ukraine that is designed to order compensation for Russian war damage in Ukraine. The decision therefore does not immediately confiscate Russian reserves; instead it embeds them within a longer-term legal architecture of contingent repayment.

To understand the significance of this step, one must examine the legal arguments in considerably greater depth.

From immobilisation to monetisation: the baseline legality

The initial freezing of Russian Central Bank assets in 2022 was justified under the European Union’s Common Foreign and Security Policy and the relevant sanctions regulations adopted pursuant to Articles 29 TEU and 215 TFEU. Immobilisation — preventing transfer, conversion or use — is widely accepted as a lawful sanctions measure. It does not purport to transfer ownership; it suspends the practical exercise of property rights.

The legal difficulty arises when one moves from immobilisation to active use of those assets. Two principles sit at the centre of the debate:

Central bank assets are generally accorded a heightened level of immunity from execution. Even in circumstances where a state has been found liable before an international tribunal, courts are cautious about allowing enforcement against central bank reserves. This orthodoxy reflects systemic concerns about financial stability and reciprocity. If one state seizes another’s reserves, others may follow suit.

Accordingly, the European Union’s first step — appropriating windfall profits generated by immobilised assets, rather than the principal — was designed to avoid crossing the threshold from restriction to expropriation. The profits are characterised not as Russian property in the strict sense, but as extraordinary gains arising from the custodial environment created by sanctions. This is a legally delicate distinction, yet it has so far survived scrutiny.

Countermeasures in international law

The more ambitious legal argument rests upon the doctrine of countermeasures. Under the Articles on Responsibility of States for Internationally Wrongful Acts, adopted by the International Law Commission and widely regarded as reflective of customary international law, a state injured by an internationally wrongful act may adopt proportionate countermeasures to induce the responsible state to comply with its obligations.

Russia’s invasion of Ukraine constitutes a grave breach of the prohibition on the use of force, a peremptory norm of international law (jus cogens). It is accompanied by large-scale violations of international humanitarian law. The argument advanced by several European jurists is that the Union and her Member States, as states injured either directly or indirectly by a serious breach of a peremptory norm, may adopt collective countermeasures.

The controversial extension is this: can countermeasures include the use of sovereign assets to finance the victim state’s defence and reconstruction?

Traditional doctrine imposes limits. Countermeasures must be temporary and reversible; they must be proportionate; and they must aim at inducing compliance rather than exacting punishment. Permanent confiscation of central bank reserves appears, at first sight, to conflict with these criteria.

Proponents respond in two ways.

First, they argue that the reversible character requirement is satisfied so long as assets are not irretrievably transferred but are used as collateral or security pending compliance. A reparations-linked loan structure — such as that contemplated in the European Parliament’s €90 billion package — is thus framed as provisional. If Russia were to withdraw, cease violations and agree to reparations, the legal character of the arrangement could be adjusted.

Second, they contend that where a peremptory norm has been violated, third states have erga omnes obligations (duties owed to the entire international community) not to recognise the unlawful situation and to cooperate to bring it to an end. Financial measures that materially assist the victim state’s capacity to resist aggression can therefore be characterised not as punitive confiscation, but as lawful collective countermeasures in defence of the international legal order.

This argument remains contested. Critics warn that stretching countermeasures to encompass appropriation of sovereign reserves risks normalising a practice that could destabilise the global financial system.

Reparation, solutio damni and the loan structure

The European Parliament’s €90 billion loan must be understood against this background. Rather than declaring that Russian assets are seized, the Union is borrowing on capital markets and extending funds to Ukraine, while stipulating that repayment may ultimately be linked to Russia’s obligation to make reparation.

Under general international law, a state responsible for an internationally wrongful act is obliged to make full reparation for the injury caused. The International Court of Justice has repeatedly affirmed this principle. In principle Ukraine possesses a claim against Russia that may extend to hundreds of billions of Euros.

The concept, sometimes described as solutio damni, provides a bridge. Third states may advance funds to the injured state and subsequently seek recovery from the responsible state. In private law analogy, this resembles subrogation: the lender steps into the shoes of the creditor to the extent of the payment made.

By structuring the €90 billion as an EU loan whose ultimate servicing may be tied to reparations, the Union situates herself within this framework. She is not, formally, confiscating Russian property; she is pre-financing an obligation that Russia already owes under international law. The immobilised assets then become a potential source of satisfaction of that obligation.

Legally, this is subtler than outright seizure. It preserves the narrative that ownership of the principal remains with Russia until a lawful mechanism — treaty, arbitral award or settlement — crystallises the obligation and authorises enforcement.

European Union law constraints

Within the Union’s own legal order, additional constraints apply.

First, competence. The Union must identify a valid legal basis for each measure. Sanctions fall within CFSP, but borrowing and macro-financial assistance derive from economic and budgetary competences under the Treaties. The €90 billion loan is therefore anchored in the Union’s power to provide financial assistance to third countries facing exceptional circumstances, rather than directly in sanctions law.

Second, proportionality and fundamental rights. Any interference with property must pursue a legitimate objective, be proportionate and respect the essence of the right. The Court of Justice of the European Union has shown itself willing to scrutinise sanctions regimes closely. By avoiding direct confiscation and instead using EU borrowing backed by budgetary resources, Parliament has reduced the risk of successful fundamental rights challenges before Luxembourg.

Third, unanimity versus qualified majority. Measures under the Common Foreign and Security Policy generally require unanimity in the Council. To avoid paralysis by veto, the Commission has explored reliance on Article 122 TFEU, which permits qualified majority action in severe economic emergencies. The loan structure is more easily accommodated within such economic competences than a blunt expropriation of foreign sovereign reserves would be.

State immunity and domestic litigation risk

Even if justified under international law as a countermeasure, enforcement within domestic courts presents hazards. Russian entities have already initiated litigation in various jurisdictions challenging aspects of the sanctions regime.

Belgium, as host to Euroclear, bears particular exposure. Should a court conclude that transferring or appropriating assets violates immunity or domestic constitutional guarantees, damages claims could follow.

The loan model mitigates this risk in two ways.

First, because the principal remains formally untouched, courts are less likely to characterise the measure as unlawful execution against sovereign property.

Second, by raising funds through EU debt instruments and by spreading risk across the Union’s budget, liability is collectivised. Any adverse judgment would engage Union-level financial mechanisms rather than falling solely upon the Belgian state or a single financial intermediary.

The unresolved question: principal versus profits

At present the Union relies primarily upon windfall profits generated by immobilised assets and on general EU borrowing. The principal of the frozen reserves remains intact.

The legal Rubicon would be crossed if the Union were to legislate for permanent transfer of the principal absent a peace settlement or arbitral award. To defend such a step, the Union would likely rely squarely on the countermeasures doctrine combined with the gravity of the breach of a peremptory norm.

Whether the Court of Justice, or domestic constitutional courts, would accept such an extension remains uncertain. The legal arguments are ingenious but not unassailable. Much would depend upon the framing: whether the measure is presented as temporary security pending reparation, or as definitive confiscation.

Nevertheless decisions of the International Claims Commission for Ukraine, quantifying Russian state liability for aggression in Ukraine, may state that they can be satisfied by execution against Russian sovereign assets; and this may be the point at which repayment of the loan out of frozen Russian capital is considered legally palatable.

Strategic and systemic consequences

The European Parliament’s approval of the €90 billion loan illustrates the Union’s current equilibrium. The European Union has chosen legal caution combined with financial ambition. Rather than test the outermost limits of international law through immediate confiscation, it has constructed a structure that keeps the principle of “the aggressor pays” alive while insulating itself from the most acute litigation and systemic risks.

The deeper legal debate will not disappear. If the war persists and reconstruction costs mount, pressure will grow to move from revenues and contingent repayment to the principal itself. At that point, the doctrines of countermeasures, erga omnes obligations, state immunity, proportionality and the role of the International Claims Commission for Ukraine will cease to be academic. They will determine whether Europe can sustain her strategy without undermining the very legal order she invokes in Ukraine’s defence.

For now the €90 billion decision stands as a sophisticated compromise — a bridge between political necessity and legal orthodoxy, designed to ensure that Ukraine receives immediate support while the law is carefully, and deliberately, stretched but not yet broken.