European leaders are poised to approve a groundbreaking proposal to utilize €140bn (£121bn) of frozen Russian state assets to support Ukraine’s reconstruction and defense efforts. The plan, set for discussion at a Brussels summit on Thursday, marks a significant escalation in the EU’s response to Russia’s ongoing aggression. The funds, currently held by Belgium-based financial institution Euroclear, would be redirected as a zero-interest “reparations loan” to Kyiv, with repayment expected through future reparations from Moscow. This move, however, faces legal and geopolitical hurdles, including concerns over global financial stability and potential Russian retaliation. The EU has already been using the interest from these frozen assets—amounting to €3bn annually—for Ukraine’s defense since 2024. The proposal, months in the making, seeks to address Ukraine’s urgent financial needs amid dwindling U.S. support and the approaching fifth year of the war. Ukraine’s reconstruction and recovery costs are estimated by the UN and World Bank to exceed $486bn (£365bn; €420bn). While countries like Poland and Finland have lauded the plan as “ingenious,” others, including Hungary and Slovakia, remain skeptical. The EU must also navigate internal disagreements on how Ukraine should allocate the funds, with some nations advocating for military spending and others prioritizing budgetary support. The plan’s success hinges on Ukraine’s victory and Russia’s willingness to pay reparations—a scenario with no guarantees. If Russia refuses, the financial burden could fall on European taxpayers, raising concerns about the proposal’s long-term viability.