German Chancellor Advocates for Use of Frozen Russian Assets to Support Ukraine
German Chancellor Friedrich Merz has made a bold shift in policy, urging the European Union to utilize $160 billion in frozen Russian assets to support Ukraine’s military efforts. This move marks a significant departure from previous stances by Berlin, which had been hesitant due to legal and financial concerns.
In an op-ed published in the Financial Times, Merz argued that this action is essential to bolster Ukraine’s capacity to sustain its defense against Russia. He emphasized the need for Ukraine to demonstrate “greater staying power” in the conflict, hoping it will pressure the Kremlin into negotiations.
Merz highlighted the importance of circumventing existing obstacles, stating, “This must not hold us back.” His proposal includes mobilizing financial resources on a scale that would ensure Ukraine’s military resilience for years. The funds would be provided as an interest-free loan, to be repaid once Russia compensates Ukraine for the damage caused by the war.
Currently, approximately $300 billion in Russian Central Bank assets are frozen globally, with a significant portion held within the European Union. A large share, around $229 billion, is managed through Euroclear, a Belgian clearing house. Merz’s plan targets $160 billion of these assets for use in supporting Ukraine.
Under the proposed mechanism, Ukraine would only be allowed to use the funds for purchasing weapons, not for general budgetary purposes. Payments would be made in installments, with EU states and Ukraine jointly deciding on the procurement of specific materials. This approach aims to strengthen and expand Europe’s own defense industry.
Germany has been a major contributor of both military and financial aid to Ukraine since the war began. Merz, who took office in February, has consistently supported Kyiv and made the conflict a central focus of his leadership. He is seen as a key figure in the “coalition of the willing” and maintains a strong relationship with US President Donald Trump.
In his op-ed, Merz outlined plans to push European leaders to agree on the proposal during an informal EU meeting in Copenhagen next week. The goal is to secure a mandate for the initiative at the upcoming EU summit at the end of October. He expressed hope for “unanimous” approval, or at least a large majority, signaling a challenge to countries like Hungary and Slovakia, which have close ties to Russian President Vladimir Putin.
Key Details of the Proposal
- Amount Targeted: $160 billion in frozen Russian assets.
- Purpose: To fund Ukraine’s military procurement.
- Loan Terms: Interest-free, to be repaid after Russia compensates Ukraine.
- Distribution Mechanism: Installments with joint decisions between EU states and Ukraine.
- Industry Impact: Aimed at strengthening Europe’s defense sector.
Implications for the European Union
The proposal raises important questions about the legal and ethical implications of using frozen assets. While Merz argues that this move is necessary for Ukraine’s survival, it also faces opposition from some EU members. The potential for diplomatic tensions with Russia cannot be ignored, as Moscow has already warned that such actions will not go unanswered.
Merz’s stance reflects a broader shift in European attitudes toward the conflict, with increasing calls for more decisive action. As the EU prepares for its upcoming summit, the debate over the use of frozen assets is likely to intensify, shaping the future of European foreign policy in the region.
Broader Context
The war in Ukraine has had far-reaching consequences, affecting global markets, energy supplies, and international relations. Germany’s decision to advocate for the use of frozen assets underscores the growing urgency to support Ukraine and deter further aggression from Russia. As the conflict continues, the role of the European Union in shaping the outcome remains critical.
With Merz at the forefront of this initiative, the coming weeks will be crucial in determining whether the EU can unite behind a common strategy. The success of this proposal could set a precedent for future international responses to similar crises, reinforcing the importance of collective action in times of conflict.
