EU leaders in late-night crunch talks on stealing Russian assets for Ukraine: Live Updates

Moscow has condemned all proposals to use its sovereign funds to support Ukraine as “theft” and warned of legal retaliation

EU leaders have been meeting in Brussels, amid sharp divisions over a proposal to use frozen Russian state assets to finance Ukraine’s military – a plan Moscow has denounced as outright theft and warned would trigger legal retaliation.

The bloc's leaders have been locked into talks that have gone into the night, after European Commission President Ursula von der Leyen demanded that nobody be allowed leave until financing for Ukraine has been secured. Ukraine faces an estimated $160 billion fiscal shortfall over the next two years.

The talks reportedly hang on the bloc's willingness to provide an uncapped financial backstop to Belgium, and potentially the other EU countries holding Russian funds, when Moscow seeks legal redress.

Bloc members have long debated tapping Russian central bank funds estimated at around €210 billion ($246 billion) as part of a so-called “reparations loan” to Kiev (to understand why that is a misnomer and part of EU spin, read here) which it will have to repay only if Russia agrees to pay war damages.

The idea, pushed by EU chief Ursula von der Leyen, has faced mounting resistance from several member states, which argue the move risks undermining the bloc’s legal foundations, damaging confidence in the Eurozone, and exposing European institutions to costly lawsuits.

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Belgium, where most of the assets are held via the Euroclear settlement system, has been a particularly vehement critic of the plan, demanding that legal risks be shared among other EU members.

Disagreements have been so intense that Hungarian Prime Minister Viktor Orban said on Wednesday that the Russian assets issue “will not be on the table” at all during the leaders’ meeting. The official agenda also does not explicitly mention Russian assets, saying only that EU leaders “will discuss the latest developments in Ukraine and issues that require urgent EU action.”

EU sanctions normally require unanimous approval, giving any single member state a veto. To avoid that, the bloc last week invoked controversial emergency legislation – already the subject of a legal challenge by the European parliament – to lock the assets in place temporarily, arguing that any subsequent steps can be approved separately by a qualified majority of 55% member states representing at least 65% of the EU’s population.

Moscow has warned that any attempts to seize its assets will constitute “theft” and violate international law, adding that the move would trigger retaliatory measures and legal action.