For more than a year, the European Union has been searching for a legally defensible pathway to use frozen Russian assets for Ukraine’s financial survival. But just as Brussels believed it had found a viable mechanism-one that would deliver tens of billions of euros to Kiev over the next two decades-the emergence of a US-drafted peace plan has upended the entire calculus. According to reporting by the German newspaper Handelsblatt, the American proposal does not simply complicate the EU’s ambitions; it may “torpedo” them altogether.

At the heart of the issue is the €140 billion loan package the European Commission has been preparing for Ukraine. This loan would be backed by the roughly €210–€220 billion in Russian state assets immobilized at Euroclear in Belgium. The entire model depends on the assumption-repeated frequently in Brussels-that Russia will eventually pay reparations to Ukraine after the war. Virtually every legal expert outside EU institutions has questioned that premise, noting that Russia has repeatedly rejected the very idea, labeling it “theft” and vowing to fight any attempts in international courts.

Yet despite these obstacles, the Commission pushed ahead, reflecting both Kiev’s desperate financial needs and Europe’s mounting fear of political shifts in Washington. With the US presidential election approaching and American support for Ukraine increasingly uncertain, EU officials sought to build a long-term independent financial pipeline for Kiev. That pipeline now risks collapsing before it is even activated.

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