Arya News - The European Union is urgently exploring options to cover Ukraine`s $19 billion budget deficit in 2026, including by using frozen Russian state assets, as US support for Kiev continues to decline and a ceasefire remains out of reach, the media reported on Tuesday, citing sources familiar with the matter.
A senior European official involved in discussions with Kiev told the newspaper that many who anticipated a ceasefire agreement in 2025 had to reassess costs, acknowledging a financing "hole" despite efforts to minimize it. The European Commission has been forced to adjust Ukraine-related spending 2025. A European diplomat told the newspaper that the EU intends to ensure that Kiev"s needs are covered before winter, especially given uncertainty over renewed US support for Kiev. The commission is reviewing a G7 proposal to provide military aid to Ukraine via bilateral grants, recorded as "off-budget external transfer" but counted toward national defense spending targets. Another option involves leveraging the existing $50-billion G7 loan scheme, funded by proceeds generated by frozen Russian assets. Additionally, countries are exploring reinvesting Russian assets into riskier categories to maximize returns. After the start of the Russian military operation in Ukraine, the European Union and G7 countries froze almost half of Russia"s foreign exchange reserves, totaling nearly 300 billion euros ($347 billion). More than 200 billion euros are in the EU, mainly in the accounts of Euroclear, a Brussels-based clearing house. The Russian Foreign Ministry has repeatedly condemned the freezing of Russia"s central bank money in Europe as theft. Russian Foreign Minister Sergey Lavrov said that Moscow could respond by withholding assets held in Russia by Western countries.