Ukraine urges EU to use frozen Russian assets to plug budget gap

Ukrainian Finance Minister Serhii Marchenko called upon the European Union to utilize frozen Russian assets to address Ukraine's growing financial and military needs, which could amount to $78 billion by 2027, according to Euronews on September 29. Marchenko revealed that Ukraine has secured $20 billion in financial aid so far, leaving a $32.6 billion shortfall.

The minister also highlighted that nearly $45 billion in defense spending remains unfunded, raising Ukraine's projected funding gap to $78 billion. Marchenko urged European partners to take "bold actions" regarding the frozen Russian assets, emphasizing that a prolonged war will only exacerbate Ukraine's financial burden. One potential solution being considered in Europe involves creating a centralized system to manage frozen Russian assets, transferring them from Belgium's Euroclear depository to an EU-controlled entity, thereby reducing legal and financial risks for Belgium, which currently holds the majority of the funds.

The EU currently manages approximately $238 billion in immobilized Russian Central Bank assets, with the bloc channeling the interest earned from these assets into Ukraine. In August, the European Commission transferred an additional $1.6 billion, bringing the total windfall profits sent to Ukraine to around $9 billion since the freeze began.

Marchenko cautioned that the 2027 budget outlook is the toughest since the full-scale invasion began, estimating the uncovered external financing gap at $32.6 billion. He suggested that European partners should reassess their efforts to find a mechanism to utilize the frozen Russian assets to bridge this gap. A letter signed by 123 Members of the European Parliament urged EU leaders to resume discussions on using the $215 billion in Russian state assets to aid Kyiv, warning that the previously approved $97 billion EU loan for 2026-2027 will fall short of covering Ukraine's escalating wartime requirements.