The EU avoided a decision to confiscate assets or income. The European Council (EUCO) summit on December 18 decided neither to confiscate the frozen Russian assets nor to formally use the income generated by the frozen assets. Instead, the EU (except for three states: Hungary, Slovakia, and Czechia) agreed to raise a $90bn loan, to partially cover Ukraine’s expected budget deficit for 2026 and 2027, and to service it out of the EU budget (€3.0bn annually)

Note: The $90bn falls short of the approximate $130bn that the IMF says is needed. It is assumed that non-EU member states of the G7 will provide the difference.

This does not end the risk of some confiscation. The fact that the EU has not formally confiscated either the underlying assets or the income does not eliminate the risk of Russia targeting funds in the I and C accounts (cash owned by investors and companies registered in unfriendly states) frozen in Russia.

The EU has already taken EUR3.7bn. The government has previously not responded to the EU, “informally” taking income generated by the Euroclear assets (approximately $200bn) in Belgium. In total, the EU (as of August) has taken EUR3.7bn from the income (Euroclear/Belgium has taken most of the rest in fees and taxes). Based on previous actions, the EU may take another EUR1.0–1.5bn in 1Q26 and send that to Kyiv.

Russia’s position has now changed, and it will seek redress for monies (income) and any future money taken. The Moscow Arbitration Court has scheduled a preliminary hearing for January 16 in the Bank of Russia's lawsuit against Belgium's Euroclear Bank seeking approximately RUB18.2 trillion ($202bn) in damages.

Bank of Russia statement. "In connection with the ongoing attempts by the European Union authorities to illegally seize/use, without the consent of the Bank of Russia, its assets placed in EU financial institutions, including by establishing a permanent immobilization of its assets, the Bank of Russia, in accordance with its previously stated position on ensuring the protection of its interests, announces that it will recover from European banks in a Russian arbitration court damages caused by the illegal blocking and use of its assets, in the amount of illegally withheld assets and lost profits,".

Sword of Damocles rather than a quick action. Assuming this case moves forward (and the view in Moscow is that it will, but slowly and to keep the threat of major confiscation elevated), then not only will the I and C accounts be at risk, but eventually so too will be other operational assets owned by EU-registered enterprises.

Moscow is very focused on efforts to attract new and returning investors. However, there was a sense of relief in Moscow over the weekend (informal discussions) that the EU did not formally confiscate the assets or income. Had the EU done so, then the government would have no choice but to support the compensatory confiscation of EU assets in Russia. But the government does not want to go that route; to do so would destroy any hope of attracting new foreign investors for a very long time.

The EU is also worried about asset confiscation in Russia. Hungarian Prime Minister Viktor Orbán also confirmed that at least one of the reasons for the EU not taking the action (at the summit) was because of fears of retaliatory measures. According to him, after assessing the potential consequences for EU countries, it became clear that the assets of private European companies in Russia exceed the frozen Russian assets in the EU. Orbán emphasized that in the event of retaliatory action from Russia, Europe would not gain but lose.

The “threat” of future escalation, beyond targeting the I and C accounts for an equal amount to that taken by the EU and sent to Ukraine (EUR3.7bn to date), may still arise if Russia and the EU do not eventually agree on the use or release of the frozen assets.

EC plans to keep the Russian assets frozen indefinitely. European Commission (EC) President Ursula von der Leyen confirmed, after the EU summit, that unblocking frozen Russian assets in Europe is only possible with a qualified majority vote in favor of the European Union (EU). She explained that previously, assets could be unfrozen if at least one EU country refused to extend the freeze. "Now, Russian assets are frozen until Russia pays reparations. Their unfreezing is now possible only by a qualified majority decision of EU countries. Russia has consistently ruled out any possibility of compensation to Ukraine.

French President Macron also stated that the EU will continue to seek solutions that will allow frozen Russian assets to be used in Ukraine's interests.

The British government has no plans to use frozen Russian assets to provide aid to Ukraine, as the EU previously abandoned such plans, the Financial Times reported, citing unnamed officials. "The British government has assured that it will not implement its own plan to use approximately GBP8bn of Russian assets in UK banks to aid Kyiv after the EU failed to agree on a similar initiative," the article states.