BRUSSELS — Brussels has won a powerful backer in its controversial push to send billions of euros of Russian frozen state assets to Ukraine.

A top official from Germany, the EU’s biggest country, told POLITICO that Berlin is open to “new, legally sound” plans to use up to €172 billion of frozen Russian cash to help Ukraine’s war effort — a reference to the European Commission’s latest idea.

The idea, first reported by POLITICO, is to take billions of euros of Russian state cash currently held in a Belgian depository, send it to Ukraine, and replace the withdrawn cash with EU-backed bonds.

By replacing the frozen cash with IOUs, the Commission hopes to avoid accusations of illegally confiscating property of the Russian state — an idea one diplomat described as “legally creative.”

“We are open to look at new, legally sound options on the table to make use of the Russian frozen assets,” Michael Clauss, the adviser for European affairs to German Chancellor Friedrich Merz, said in written remarks to POLITICO.

Berlin is now putting pressure on other countries to throw their support behind the plan ahead of an informal gathering of EU leaders in Copenhagen next Wednesday.

“That’s also going to be a key topic of discussion at the Informal EUCO (European Council),” said Clauss, who was previously Germany’s ambassador to the EU.

“The Ukrainians need the money to continue to purchase weapons, and there are not so many options.”

It’s a significant about-turn by Germany, which had previously been cautious toward any innovative ideas to use Russian state assets that were immobilized after Moscow’s full-scale invasion of Ukraine in February 2022.

Supporters of the Commission’s plan claim that it would be legally secure as it wouldn’t technically expropriate the Russian assets themselves. But some, including the firm holding the cash, Euroclear, fear it will expose them to legal risk.

French President Emmanuel Macron also struck a more cautious note, saying in an interview earlier this week that “you cannot seize these assets from the (Russian) Central Bank” because it would violate international laws.

The German government, on the other hand, is keen to use the “reparations loan” to offer military support to Ukraine as opposed to rebuilding damaged buildings and infrastructure, three officials with knowledge of the talks told POLITICO.

The €172 billion question

The bulk of the Russian assets are held by the Brussels-based financial firm Euroclear and are invested in Western government bonds that have matured into cash.

The Commission suggested using this cash — which amounts to €172 billion, according to two officials with knowledge of proceedings — to fund a “reparations loan” to Ukraine, while leaving €13 billion of underlying assets untouched.

With Ukraine facing a gaping budget shortfall next year, the Commission sees this solution as the last chance to support the war-torn country without tapping into taxpayers’ money.

The U.S.’s disengagement from Ukraine under President Donald Trump has added pressure on the EU to step up.

In a bid to reassure Euroclear, the Commission suggested swapping the cash deposits with zero-coupon EU bonds guaranteed by the bloc’s members.

That would effectively postpone the issue of whether to expropriate the assets until the bonds reach their maturity, the timetable for which hasn’t yet been defined.

The Commission will put forward a formal proposal when there is sufficient buy-in from most EU countries.

In the meantime, skeptics have questioned the scheme over lingering fears that it might fuel financial volatility and undermine the role of the euro.

“I want to see something in writing,” President of the European Central Bank Christine Lagarde said on Friday. “But I’m not the only one.”

Antonia Zimmermann reported from Berlin.

Camille Gijs contributed to this report.