Japan Rejects EU Push to Tap Frozen Russian Assets for Ukraine

December 11 ------ Japan has reportedly rejected an EU appeal to join its plan to use frozen Russian state assets to support Ukraine, delivering another setback to Brussels’s plan to finance Ukraine.

Politico, citing sources, said Tokyo dismissed the EU’s request to replicate its model of sending Ukraine the earnings from Russian sovereign assets held at Euroclear in Belgium at a meeting of G7 finance ministers on Monday, Dec. 8. Two EU diplomats told the outlet that Japan signaled it cannot use the approximately $30 billion worth of frozen Russian assets on its territory to issue a loan to Ukraine.

The European Commission is pushing EU members to approve a plan to leverage up to €210 billion (over $244 billion) of sanctioned Russian funds ahead of a leaders’ summit on Dec. 18. But Belgium is resisting, warning it could be held liable if Russia eventually seeks repayment. Brussels has urged other G7 nations to issue parallel loans backed by Russian assets they hold, arguing that shared participation would reduce the risk of Russia targeting Belgium alone. However, both the US and Japan have refused to join the scheme, leaving the EU increasingly isolated in its effort to meet Ukraine’s urgent financial needs.

According to an EU diplomat, Washington told partners it will halt additional support for Ukraine after distributing the final installments of a G7 loan arranged under the Biden administration.

Japanese Finance Minister Satsuki Katayama cited legal constraints, but several officials suggested Tokyo’s position is influenced by US opposition, noting that Japan is unlikely to break with its most important security partner. As per the report, Ukraine faces a budget gap of €71.7 billion (over $83 billion) next year and is expected to begin cutting public spending from April without new funding.

G7 finance ministers said in a joint statement that they remain committed to exploring options to support Ukraine, including “potentially using the full value of Russian sovereign assets immobilized in our jurisdictions,” while stressing that any actions must align with national legal frameworks.

Despite pushback from Japan and the US, European Commission President Ursula von der Leyen reaffirmed her backing for the EU plan after a Monday meeting with Ukrainian President Volodymyr Zelensky, British Prime Minister Keir Starmer, French President Emmanuel Macron, and German Chancellor Friedrich Merz. “Our reparations loan proposal is complex, but at its core, it increases the cost of war for Russia,” von der Leyen said. “The longer Putin wages his war… the higher the costs for Russia will be.”

The European Central Bank (ECB) has reportedly refused to serve as a “lender of last resort” for an EU plan to use frozen Russian assets to finance Ukraine, warning that guaranteeing a reparations loan could breach EU treaties. Belgium has also continued to raise concerns about the legal risks involved in accessing the assets. The proposed loan – strongly opposed by Belgium, whose Euroclear securities depository holds the bulk of Russia’s immobilized assets – would channel funds to Ukraine now, with the expectation that Kyiv would only be responsible for repayment if Russia eventually pays reparations.

Source: kyivpost.com