Europeans are furious over US President Donald Trump's suggestion that billions in Russian assets frozen in European countries could be used to benefit the US government and companies.
After Trump's proposal to end the war in Ukraine – which entails Ukraine handing over some territory and reducing its armed forces – the Europeans rushed to repair the damage and put forward their own proposal.
"Every day something changes," Secretary of State Marco Rubio said after meeting with Europeans in Geneva.
But it remains unclear whether they will be able to maintain control over how Russia's frozen funds are spent.
Agat Demara, senior geoeconomics researcher at the European Council on Foreign Relations (ECFR), says billions in Russian funds appear to be Trump's key motivation for pushing the deal.
"Trump is extremely interested in getting those billions," she told DW.
What are Russian frozen assets and where are they located?
When Russia invaded Ukraine on February 24, 2022, nearly €300 billion of its assets were held outside Russia and subsequently frozen under Western sanctions. These assets include money in bank accounts, securities, real estate, and yachts.
Although many countries - including the US, Canada, the UK and Japan - hold some of these assets, the bulk is in EU member states, most notably Belgium. Euroclear, a financial depository based in Brussels, holds around €180 billion in frozen Russian assets.
Since the beginning of the war, Europeans have been debating whether and how to use Russian assets to make Russia pay for the war it started. The last such debate took place in October, when Belgium vetoed a "reparations loan" the EU wanted to offer Ukraine for reconstruction.
Belgium fears legal problems and the possibility that Russia will one day demand the return of its money. That is why it refused to agree and demanded that the responsibility be shared with other countries.
The EU had hoped to assuage Belgian concerns and win them over at a summit in mid-December. But Trump's proposal scuttled that plan and instead offered what Demara describes as a proposal to "confiscate Russian assets lying in Europe."
What does Trump propose, and what do the Europeans propose?
According to Trump's 28-point proposal, as reported by various media outlets, $100 billion (86 billion euros) of frozen Russian assets would be invested in "US-led reconstruction and investment efforts in Ukraine."
Or, as Demara puts it: Trump intends to take the first 86 billion euros of Russian assets frozen in Europe and use them to benefit both the US government and American companies.
The plan also says that Europe would add the same amount to increase investment in Ukraine's reconstruction. The money Trump wants Europe to contribute would not come from frozen Russian assets: "It would come from the pockets of European taxpayers," Demara says.
More than 200 billion euros of the remaining frozen assets would be invested in a joint US-Russian investment fund, "to create a strong incentive not to return to conflict."
"Three actors would benefit from this plan – American companies, the American government and Russia," Demara said.
The proposal by European powers – Germany, France and the UK – calls for the use of Russian state funds for the reconstruction of Ukraine. According to the plan, Russian funds frozen in Europe “will remain frozen until Russia compensates Ukraine for the damage.”
"This is a way to somehow move forward, but not to confiscate Russian assets yet," Filip Bednarczyk, director of the Warsaw office of the German Marshall Fund (GMF) USA think tank, told DW.
"We are still somewhere in between, but certainly in a much better position than as proposed in Trump's 28-point plan — where both the US and Russia would have a say in where the funds go, without consulting the Europeans," Bednarczyk says.
Can the US use Russian assets located in Europe for the benefit of American companies?
Yana Kobzova, co-director of the European Security Program at ECFR, says the US "only holds about $5 billion" in frozen Russian assets and cannot decide on assets held in European countries.
"The US can only decide on assets that are within its jurisdiction," she says.
Writing for the ECFR, Kobzova argues that Europeans must insist that "the European public would accept the use of Russian funds from European territory to stabilize Ukraine" and support European defense spending in that country, "but would find it difficult to accept that these funds simply bring mega-profits to American investors."
European leaders have made it clear that they oppose Trump's plan.
"Russian funds held in Brussels cannot be paid to the Americans, that is unthinkable," German Chancellor Friedrich Merz said in an exclusive interview with DW.
"Issues that directly concern the EU, such as sanctions, enlargement or frozen assets, require the full involvement of the EU in decision-making," said Antonio Costa, President of the European Council.
French President Emmanuel Macron told RTL that only Europeans can decide what to do with Russian assets held by Europeans.
Bednarczyk says that Europeans are not in principle against cooperating with the US in defining a common strategy and that under former President Joseph Biden they wanted a collective decision on how to deal with frozen assets. But now they no longer want that.
"The dynamic has changed," Bednarczyk says. "Trump is much less appreciative of Europe's voice and often ignores it."
Experts argue that it is time for the EU to win over Belgium and act quickly.
"If the EU were to seize Russian assets and grant loans to Ukraine, Trump would no longer be able to reach the 300 billion euros," Demara says.
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