Senior European Union officials have acknowledged that Ireland’s policy of military neutrality must be respected as the bloc advances plans to convert €140 billion in frozen Russian assets into a loan for Ukraine.
The proposal, currently under debate at an EU summit in Brussels, represents one of the most complex financial and legal manoeuvres since Russia’s full-scale invasion of Ukraine in February 2022. The idea is to use interest generated from Russia’s frozen central bank reserves—most of which are held in Belgium’s Euroclear securities depository—to fund Ukraine’s military and reconstruction efforts.
Belgium has long resisted the outright seizure of Russian assets, citing legal and financial risks. However, in recent months, Brussels has softened its stance. The Belgian government is now prepared to move forward—provided other EU countries share the financial guarantees. “Belgium cannot bear the legal risks alone,” one official said, stressing the need for a solidarity mechanism among member states.
For Ireland, the issue presents a diplomatic and constitutional dilemma. As one of the EU’s four neutral countries, alongside Austria, Malta, and Cyprus, Ireland has maintained a strict policy of providing only non-lethal assistance to Ukraine. Becoming a co-guarantor of the loan would mean underwriting funds that could potentially be used for military purposes.
Until now, Ireland’s contributions through mechanisms like the European Peace Facility (EPF) have been channelled toward humanitarian and non-lethal aid. The use of frozen Russian assets could blur that distinction, as Ukraine would likely have discretion to direct the funds toward both military and civilian needs.
The EU’s current plan would see Ukraine repay the €140 billion loan once Russia begins paying reparations—a distant prospect. This structure allows the EU to claim it is not seizing Russian assets outright but merely using them temporarily.
The move comes as Ukraine faces mounting financial pressures and waning U.S. support. Reconstruction costs are now estimated at over $524 billion. Germany and other member states have argued that the funds should primarily support Ukraine’s defence, while Ireland and others prefer a broader approach covering both civilian and military expenditures.
EU officials hope to finalise a legal text by early November, paving the way for the assets to be converted by year’s end. The European Commission has indicated it will account for the specific concerns of neutral member states during this process.
Meanwhile, Russia has warned against the plan. In a statement last week, the Russian Embassy in Dublin denounced any use of frozen assets as “grand theft,” claiming it could trigger serious repercussions for Europe’s financial stability.
