Ukraine sees growing appetite for talks on Russian frozen assets, senior official says

By Yuliia Dysa

KYIV, Sept 4 (Reuters) - Ukraine sees a growing appetite among European allies to renew a serious discussion on the use of Russian frozen assets, a senior government official told Reuters, following an informal EU foreign ministers' meeting on Wednesday in which Kyiv took part.

Ukraine faces a pressing budget deficit for this year and next and, as the war with Russia escalates, officials say Kyiv needs an additional €27 billion ($31 billion) for defence spending in 2026.

Ukrainian politicians have asked allies to be creative and fast in covering it.

With some €210 billion of Russian central bank assets immobilised in the EU since the start of the war, the Netherlands, Poland, Spain and Sweden have suggested reopening the debate on their possible use, which some allies have long opposed, citing legal issues.

Ukraine sees growing readiness among European partners to resume serious discussion and to reach a decision after all, the Ukrainian official said, requesting anonymity to discuss a sensitive issue.

The official said some allies wanted to keep assets as a negotiating chip for future talks, but Kyiv thinks this is unnecessary and wants access to the funds now.

Finance Minister Serhii Marchenko said that the Ukrainian government was talking to its partners about changing legal jurisdictions for some part of the frozen Russian assets.

The bulk of the funds is held at the Brussels-based depository Euroclear. Belgium has resisted proposals to use the funds due to potential legal risks in the event of Russian retaliation or litigation.

"We want to discuss it. The plan creates new conditions where it is not the responsibility of Belgium to face court disputes with Russia, but the joint responsibility of the 27 (EU members)," Marchenko told Euronews.

Belgium said on Wednesday that its position remained unchanged.

Ukraine's budget deficit is more than $32 billion this year and the government plans to cover it with funds from the EU and other partners. A similar amount would be required for 2027, Marchenko said, adding that the government was now holding talks with its key lender, the International Monetary Fund, on next year's budget plans.

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(Reporting by Yuliia Dysa, additional reporting by Olena Harmash Editing by Peter Graff and Philippa Fletcher)