China News Service, Beijing, October 13 (An Ran) Recently, Spain's "El Pais" quoted EU sources as saying that the European Commission is studying the establishment of a "bad bank"-style specialized agency to dispose of Russia's frozen assets of 210 billion euros and raise money for Ukraine.
"Bad bank" concept sparks controversy
The new plan studied by the EU is similar to a "bad bank", with specialized agencies taking over Russia's frozen assets. After the assets are handed over, the corresponding funds can be invested in reconstruction projects in Ukraine. The Financial Times previously quoted a senior Brussels official as saying that the assets, along with all the legal risks attached to them, need to be divested from the European Bank for Settlements.
Spain's El Pais quoted sources as saying that EU experts characterized this mechanism as a "temporary use" of assets rather than a "confiscation"; according to the assumption, after the Russia-Ukraine conflict ends, Ukraine will return the money to the EU on the premise of receiving compensation. Even so, the 27 EU countries have not yet reached a consensus on the use of funds, losses in the event of Russian claims, and risk sharing. More than 120 members of the European Parliament who support aid to Ukraine are still exerting pressure, calling for the direct "confiscation" of the frozen assets of 210 billion euros.
How to use frozen funds of 2100 euros
If the EU wants to use this fund, it is far from as simple as directly "confiscating" it. After Russia launched a special military operation in February 2022, among the Russian overseas assets frozen by the West, 210 billion euros of Russian central bank assets were deposited in the European Bank for Settlements in Belgium. This fund originally required the consent of all EU member states every six months to extend the freeze. At the end of 2025, the EU adjusted the freeze to indefinite before opening the channel to discuss the use of assets.
However, differences within the EU remain prominent. At the Brussels summit last December, Belgium and Hungary successively expressed concerns about legal risks and potential financial costs. The summit temporarily shelved the idea of directly using frozen assets and decided to provide 90 billion euros in aid to Ukraine from 2026 to 2027 by raising debt through the capital market. However, the funding gap for aid to Ukraine continues to exist, and the European Commission will not stop studying the disposal plan for Russia’s frozen assets.
Russia strikes back hard: reciprocal countermeasures
Russia's response was equally tough. Russia continues to sue the European Bank for Settlements through judicial channels. Russian Presidential Press Secretary Peskov said that the disposal of Russia's sovereign assets is essentially plunder, and the disputes within the EU itself prove that the plan is unreasonable.
Russian Foreign Minister Lavrov warned: If the West confiscates frozen assets, Russia has the right to retaliate and reserves the right to detain Western countries’ funds in Russia. Putin bluntly stated that the seizure of Russian sovereign assets is theft. Russia also emphasized that the UN General Assembly resolution demanding compensation from Russia is not legally binding.
At present, it seems that the EU wants to rely on "bad banks" to host the funds, share risks collectively, and avoid the legal characterization of "confiscation", but the reality is far from that easy. On the one hand, there is Ukraine’s continuously expanding funding gap, and on the other hand, there are international legal constraints, cross-border litigation, and Russia’s tough countermeasures. The discussion surrounding this 210 billion euros has not yet reached a unified answer. Due to legal and geopolitical risks, this money is still a hot potato.
