EU eyes €200B secret weapon as Trump dominates Ukraine peace talks

BRUSSELS — U.S. President Donald Trump is acting like he holds all the cards in talks to end the war in Ukraine.

But Brussels has a €200 billion secret weapon up its sleeve.

After being left out of discussions with the U.S. and Russia Feb. 18 on ending the war in Ukraine, European governments could go for the nuclear option — seizing the Russian sovereign assets that were immobilized after Moscow launched its full-scale invasion of Ukraine three years ago.

Luckily for the bloc, the lion’s share of those funds — around €200 billion — is being held in Brussels-based financial institution Euroclear and is earning interest. The U.S., on the other hand, holds a mere $5 billion.

Seizure of those assets is a drastic option that would almost certainly guarantee Europe a bigger seat at the table, after it was frozen out by the U.S. and the Kremlin in their recent talks in Riyadh, Saudi Arabia.

But as finance ministers and central bank governors gather in South Africa this week for the G20, EU governments remain divided on whether unfreezing those funds would prove to Trump that Brussels still has some muscle — or whether it would backfire.

Bargaining chip

Amid the looming threat of U.S. disengagement from Ukraine, Russia hawks argue that unfreezing the cash and handing it to Kyiv would allow the war-torn country to gain the upper hand on the battlefield and resist Trump’s demands to end the war.

“[With the Russian frozen assets] we can replace U.S. support if the U.S. is still going to decide not to support Ukraine anymore,” Estonian Foreign Minister Margus Tsahkna said on Monday.

“We have €300 billion worth of Russian frozen assets in Europe, and we need to use it,” Tsahkna told journalists in Brussels, alongside his counterparts from Denmark, Sweden, Lithuania and Latvia. (Although the exact amount of Russian frozen assets in Europe is unclear, the number is generally accepted as closer to €200 billion than €300 billion.)

Baltic and Nordic countries, Russia’s neighbors, think the money should be handed to Ukraine immediately. That position is endorsed by Poland, Czechia and the EU’s top diplomat, former Estonian PM, Kaja Kallas.

“I don’t take the argument that it’s legally problematic … we need [the] political will to do it,” Lithuanian Foreign Minister Kęstutis Budrys said in an interview with POLITICO, adding that skeptical capitals “must produce some stronger arguments why we aren’t doing it.”

But the opposing camp in Europe contains the big guns — France, Germany, Italy, Spain and European Commission President Ursula von der Leyen — who fear that in confiscating the funds the EU would spook international investors and relinquish its greatest advantage in the peace talks.

“If you were to unfreeze [the assets] and give [them] to Ukraine, you don’t have it anymore and you can’t use it as a bargaining chip,” said an EU diplomat from the latter camp who, like others quoted in this article, was granted anonymity to discuss sensitive talks.

French President Emmanuel Macron, during a meeting with Trump in the Oval Office on Monday, insisted the Western allies could legally use the proceeds from the assets during the war, but insisted it would be illegal to seize the reserves themselves. He noted, however, that freezing them offered important leverage.

“It’s part of the negotiation at the end of the war,” he stressed.

Kallas herself admitted the chances of confiscating the Russian funds in the near future are slim.

“We need to have everybody’s support for this. So far we don’t,” she said during a press conference Monday.

Frozen assets as leverage

The “No” camp argues that unfreezing the funds now would undermine the EU’s leverage in peace talks with Russia.

Following his meeting with Russian Foreign Minister Sergey Lavrov in Riyadh last week, U.S. Secretary of State Marco Rubio suggested the EU will need to be involved in peace talks “at some point” because of the sanctions it has imposed on Russia.

European countries recognize that the billions of euros in frozen Russian assets give them additional influence over the Kremlin.

“If they [Russia] definitely want to get the money back, then they have to give something in return for it,” the EU diplomat quoted above said.

Although Estonia’s Tsahkna supports giving the indicted money directly to Kyiv, his government has acknowledged the advantage of holding onto the funds as leverage. In a paper prepared for a meeting of EU foreign ministers on Monday, seen by POLITICO, Tallinn wrote that “continued withholding of assets serves as a financial and diplomatic lever, ensuring that Russia has a clear, tangible incentive to negotiate a settlement and compensate Ukraine.”

The EU’s 27 leaders have also set in law that the assets will remain frozen until Russia agrees to pay post-war reparations to Ukraine.

Countries are eyeing the €200 billion stash as a bonanza to cover the exorbitant costs of rebuilding Ukraine, estimated at $486 billion by the World Bank.   

“Many are against unfreezing because they see this as money for reconstruction,” said a second EU diplomat.

With talks with the U.S. underway, Russia has warmed to the idea, as long as the funding also covers the reconstruction of the Ukrainian regions under Moscow’s control, according to Reuters.

Last year, the G7 group of industrialized countries reached a hard-fought agreement to use the profits generated by the assets to back a $50 billion loan to Ukraine.

G7 finance ministers will gather again in Cape Town on Wednesday and Thursday, within the G20, to discuss their future support for Ukraine.  

(Nicolas Vinocur and Giorgio Leali contributed to this report)