Europe’s Russian Assets Dilemma: Why the EU Blinked — and What It Means for the Ukraine War

Last week’s European Union summit in Brussels marked a turning point in Europe’s handling of the Ukraine war. Instead of seizing Russia’s frozen sovereign assets — estimated at around €210 billion — the EU chose a far more cautious path: raising a €90-billion Eurobond to financially sustain Ukraine. The decision has exposed deep fractures within the bloc, sharpened anxieties about global finance, and underlined Europe’s growing fatigue with a war whose endgame remains elusive.

Why the EU stepped back from seizing Russian assets

At the heart of the summit’s drama was the question of Russia’s frozen wealth, much of it parked at Euroclear in Belgium. While the technical mechanisms for confiscation existed, the real barriers were political and legal.

Belgium, Italy and Austria argued that outright seizure would violate international law and invite retaliation from Moscow — retaliation whose costs would fall unevenly on individual states. They insisted that any such move must involve collective burden-sharing. France’s last-minute shift in support of Italy effectively isolated Germany, which had been pushing hardest for a bolder approach.

The outcome was a compromise that satisfied no one fully: Russian assets remain frozen indefinitely, but untouched.

The €90-billion lifeline — and its hidden risks

Instead of tapping Russian money, the EU opted to raise a €90-billion Eurobond backed by its own budget to support Ukraine. This keeps Kyiv financially afloat, but raises uncomfortable questions.

Ukraine’s capacity to repay after the war is highly uncertain. The EU has nevertheless committed to paying roughly €3 billion annually in interest. The likely endgames are stark: a partial or complete write-off, reparations extracted from Russia, or a Ukrainian military victory. Each option carries political and financial risks — particularly for European taxpayers.

Cracks in the Franco-German engine

The summit laid bare a deeper malaise within Europe’s leadership core. A senior European diplomat quoted in the “Financial Times” described the moment as a betrayal by French President Emmanuel Macron of German Chancellor Friedrich Merz.

Germany, pushing initiatives and risk-taking, now finds itself constrained by a hesitant France grappling with high public debt and political instability. The imbalance has dimmed hopes of reviving the Franco-German partnership that once drove major EU policy breakthroughs.

France’s double role: deterrence and dialogue

Yet France remains central to Europe’s strategic thinking. As the EU’s only nuclear power and a country with independent defence manufacturing, Paris has responded to what it sees as a growing Russian threat by boosting military spending, increasing weapons production and doubling reserve forces.

At the same time, Macron is positioning himself as a potential mediator. Signals from Moscow suggest openness to dialogue, and bilateral talks between Macron and Vladimir Putin are being explored. This dual posture — deterrence alongside diplomacy — reflects Europe’s growing realisation that the conflict may not end on the battlefield alone.

Britain, covert warfare and the ‘dirty war’ phase

Watching from across the Channel is the United Kingdom — increasingly isolated but far from inactive. Britain’s residual strategic leverage lies in intelligence and covert operations. Recent attacks on Russian shipping, including near the Libyan coast, and the sophisticated June 1 drone strikes deep inside Russia — dubbed Operation Spiderweb — point to capabilities that Ukraine alone is unlikely to possess.

Russia has responded with unmistakable signalling. The Kremlin has announced that the Oreshnik hypersonic missile — capable of reaching Britain in minutes — and the S-500 air defence system are now on combat duty. The assassination of another Russian general in Moscow has further raised the stakes.

War fatigue and the fading illusion of unity

The Brussels summit confirmed what many European leaders privately acknowledge: fatigue is setting in. There is no unified strategy for ending the war, only a series of stopgap measures to manage its costs and risks.

Russian forces are reportedly advancing toward key Ukrainian regions, including Odessa, Kharkiv, Sumy and the industrial heartland of Dnipropetrovsk. Kremlin elites appear resigned to a prolonged campaign, with expectations that fighting will continue into next spring.

The US factor and shifting global equations

Behind Europe’s uncertainty looms a changing United States. After consultations between Putin’s envoy Kirill Dmitriev and US interlocutors, American Vice President J D Vance summed up the moment candidly: the issues are finally “out in the open”, but peace remains uncertain.

Talks of future high-level visits — including the possibility of Putin attending a G20 summit in Miami — underline Washington’s renewed interest in stabilising ties with Moscow. The latest US national security strategy, which openly questions NATO’s “endless expansion”, reflects this recalibration.

A conflict entering a new political phase

The EU’s decision to freeze — but not seize — Russian assets is more than a financial choice. It signals a shift from wartime bravado to risk management, from unity to uneasy coexistence. As the military situation hardens and diplomatic pathways tentatively reopen, any settlement on Ukraine is likely to rest not on old assumptions, but on emerging political realities.

For Europe, the Brussels summit was a moment of reckoning: a recognition that the war’s trajectory can no longer be controlled by slogans alone, and that the costs — financial, strategic and moral — are only beginning to come due.