UK Freezes Plan to Redirect Russian Assets to Ukraine Over Legal and Retaliation Concerns

By Staff, Agencies

The UK government has paused plans to use frozen Russian sovereign assets to support Ukraine, citing legal risks and fears of retaliation from Moscow.

The move follows the collapse of a similar proposal within the European Union, where member states failed to agree on how to safely deploy immobilized Russian funds.

Prime Minister Keir Starmer has previously backed the idea of using frozen Russian assets to help finance Ukraine, which has warned it could face severe financial strain by early 2026 without further international aid.

However, British officials said the UK would not act alone and would only proceed in coordination with partners such as the EU, Canada and Australia.

Instead, EU leaders agreed on an alternative plan this week, approving a €90 billion loan for Ukraine funded through borrowing against the bloc’s shared budget.

The earlier proposal to use €210 billion in frozen Russian assets—mostly held in Belgium—fell apart after Belgium sought broad guarantees against potential financial and legal risks, which other EU states rejected.

In the UK, officials confirmed that frozen Russian assets held domestically would not be used unilaterally. A government spokesperson said London would continue working with the G7 and the EU on financing options for Ukraine.

The government also plans to bring forward $2 billion in guarantees for World Bank lending to Ukraine, shifting funds forward to meet Kive's immediate needs by 2026.

Concerns raised by UK banks also played a role in halting the plan. Financial institutions reportedly worried about the legality of using frozen assets as collateral for zero-interest loans and the lack of protection against possible legal action by Russia, particularly if a future peace settlement were reached. The identities of banks holding Russian sovereign assets remain undisclosed.

Meanwhile, EU leaders agreed that Ukraine would only begin repaying the new €90 billion loan after Russia pays reparations. As peace negotiations continue—largely led by the United States—European governments, including the UK, are seeking ways to remain influential in shaping the outcome of the conflict.

Russia has said it is preparing further talks with Washington, while previous discussions involving US, European and Ukrainian officials ended without progress. Key disagreements remain over Ukraine’s NATO ambitions and territorial concessions, which Kiev continues to reject.