In U-Turn, Germany Now Backs EU’s ‘Creative’ Plan To Use Frozen Russian Funds For Ukraine

Amid all the threats and counterthreats related to warnings NATO is prepared to shoot down Russian aircraft this week, Germany has in a major policy U-turn called for the European Union to use frozen Russian assets to help fund Ukraine’s defense.

Berlin’s stance the whole time Europe has tried to gain consensus on this issue was marked by prior reluctance, but German Chancellor Friedrich Merz in a newly published op-ed for the Financial Times said the bloc needs to urgently establish a legal framework through which to unlock the assets, calling it essential to “systematically and massively raise the costs of Russia’s aggression.”

He laid out his plea for the loan to be directed toward military aid, with procurement decisions made jointly by EU member states and Ukraine, based on utilizing the €194 billion in frozen Russian assets held at Euroclear, Belgium’s central securities depository.

The fact that Germany as Europe’s largest economy is now on board is likely to both vigorously renew the debate and give fresh momentum to the hawks. Recall that a big European holdout remains France and President Emmanuel Macron, who said in Sunday interview with CBS News that confiscating frozen Russian assets would constitute a violation of international law. 

Macron, already facing a political crisis at home, tried put a lid on these discussions. “You cannot seize these assets from the (Russian) Central Bank even in such a situation. And I think it’s a matter of credibility, and it’s very important that our countries remain… and do respect the international laws,” he said.

And so this has left European governments and G7 allies exploring ways to generate revenue from these immobilized funds without outright seizing them, which would have legal and political ramifications, as well as ‘blowback’ as much of the globe’s trust in Western institutions would further erode.

The Kremlin has already long warned that any such use of its frozen assets “will not go unanswered”. But this is not scaring Merz away, who newly argues that Europe must demonstrate “greater staying power” in the war in order to force the Kremlin to the negotiating table while giving Kiev more leverage.

Merz wrote that “This must not hold us back” in reference to the lingering legal hurdles, urging the EU to consider “circumventing these problems.”

“I am advocating the mobilization of financial resources on a scale that will secure Ukraine’s military resilience for several years,” he spelled out. He outlined the following plan:

The German chancellor is now seeking to use $160 billion in a loan for Kyiv. The sum would be made available to Ukraine as an interest-free loan that would be “repaid once Russia has compensated Ukraine for the damage” the war has caused.

…Under Merz’ proposal, Ukraine would only be allowed to use the funds for the procurement of weapons, and not for budgetary purposes.

The payments to Kyiv would be made in instalments and EU states, in conjunction with Ukraine, would then determine “which material is procured.” Merz added that he felt this mechanism would also help to “strengthen and expand” Europe’s own defense industry.

In essence it would involve taking billions of euros of Russian state cash held in Belgium, transferring it to Ukraine, and then replacing the drawdown with EU-backed bonds.

BREAKING:

Danish media reveals that a Russian Navy Ropucha-class landing ship, Aleksandr Shabalin has been spotted by helicopter ~12 km off southern Langeland/Lolland in Denmark with its AIS transponder switched off.

It has been loitering there for days during Denmark’s drone… pic.twitter.com/IH6MWAoIv9

— Visegrád 24 (@visegrad24) September 25, 2025

One diplomat has described the idea as “legally creative” as replacing the taken funds with IOUs would beat accusations of illegally confiscating property of the Russian state.