Spain proposes EU use of frozen Russian assets to strengthen defense and support Ukraine

Spain has proposed creating a new defense fund to provide non-repayable grants to strengthen Europeʼs defense lines and support Ukraine with the help of immobilized assets of the Russian Central Bank.

This call came from Spanish Economy Minister Carlos Cuerpo, writes Bloomberg.

"The time has come for European solidarity to support Ukraine and the countries on the eastern front. We must invest together in defense, which is a truly European public good that benefits our citizens and strengthens our economic security," he said on the sidelines of a meeting with his EU counterparts in Warsaw.

The EU finance chiefs over the weekend explored ways to finance rearmament efforts in the region, as doubts about US commitment to NATOʼs mutual defense provisions and the growing threat from Russia push the bloc to accelerate its readiness.

The limited resources of some member states mean that the EU must find additional funding opportunities and create new pan-European instruments.

Unlike the options proposed so far, which are based only on concessional loans, Spain also wants to provide EU grants to countries, particularly eastern ones, which are more vulnerable to the Russian threat.

The option proposed by Spain, designed as a special purpose instrument, would be financed by contributions from member states attached to the EU debt, as well as from the European Stability Mechanism rescue fund.

In addition, Madrid stated that part of the frozen assets of the Russian Central Bank worth €200 billion stored in Europe could also be used to finance military projects for the benefit of Ukraine.

European Commissioner for Economic Affairs Valdis Dombrovskis told reporters after the meeting that the European Commission is “ready to explore new ways and options”, and that Spain’s focus on supporting the east of the region “fits well into the discussion we are having”.

Speaking alongside the commissioner, Polish Finance Minister Andrzej Domanski, who chaired the meeting, said the vast majority of ministers believed that additional defense financing instruments might be needed. He called the solidarity expressed by some of the blocʼs southern members "encouraging".

Frozen Russian assets

The value of frozen Russian sovereign assets in the EU is almost €211 billion. In total, the European Union, the G7 countries and Australia have frozen approximately €260 billion in securities and cash.

On October 23, the EU Council finally approved a loan of up to €35 billion to Ukraine. The money is the blocʼs contribution to the G7 initiative to provide Ukraine with a $50 billion (€45 billion) loan, which will be repaid with the proceeds from frozen Russian assets.

And on October 26, the G7 countries agreed on a $50 billion loan for Ukraine using proceeds from Russiaʼs frozen assets. The US contribution is $20 billion.

The money will be transferred “through various channels” — both to replenish the Ukrainian budget, and for military assistance and the restoration of Ukraine’s infrastructure. Reuters notes that Ukraine will receive all the funds under the loan by the end of 2027.

For more news and in-depth stories from Ukraine please follow us on X.