Business
EU backs indefinite freeze on Russia’s frozen cash ahead of big loan plan for Ukraine
Paul KirbyEurope digital editor
Thierry Monasse/Getty ImagesEuropean Union governments have agreed to immobilise indefinitely Russian assets of up to €210bn (£185bn) that have been frozen in the EU since the start of Russia’s full-scale invasion of Ukraine.
Most of Moscow’s cash is held in Belgian bank Euroclear, and European leaders are hoping to agree a deal at next week’s crunch EU summit that would use the money for a loan to help Kyiv fund its military and economy.
After almost four years of Russia’s full-scale war Ukraine is running out of cash, and needs an estimated €135.7bn (£119bn; $159bn) over the next two years.
Europe aims to provide two-thirds of that, but Russian officials accuse the EU of theft.
The Russian Central Bank said on Friday it was suing Belgian bank Euroclear in a Moscow court, in response to the EU loan plan.
‘Only fair’ to use Russia’s assets
Russia’s assets in the EU were frozen within days of the full-scale invasion of Ukraine in February 2022, and €185bn of that is held by Euroclear.
The EU and Ukraine argue that money should be used to rebuild what Russia has destroyed: Brussels calls it a “reparations loan” and has come up with a plan to prop up Ukraine’s economy to the tune of €90bn.
“It’s only fair that Russia’s frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours,” says Ukraine’s Volodymyr Zelensky.
German Chancellor Friedrich Merz says the assets will “enable Ukraine to protect itself effectively against future Russian attacks”.
Russia’s court action was expected in Brussels and European Economic Commissioner Valdis Dombrovskis said on Friday that EU financial institutions were “fully protected” from legal proceedings.
But it is not just Moscow that is unhappy.
Belgium is worried it will be saddled with an enormous bill if it all goes wrong and Euroclear chief executive Valérie Urbain says using it could “destabilise the international financial system”.
Euroclear also has an estimated €16-17bn immobilised in Russia.
Belgian Prime Minister Bart De Wever has set the EU a series of “rational, reasonable, and justified conditions” before he will accept the reparations plan, and he has refused to rule out legal action if it “poses significant risks” for his country.
EPA/ShutterstockWhat is the EU’s plan?
The EU is working to the wire ahead of next Thursday’s summit to come up with a solution that Belgium can accept.
Until now the EU has held off touching the assets themselves directly but since last year has paid the “windfall profits” from them to Ukraine. In 2024 that was €3.7bn. Legally using the interest is seen as safe as Russia is under sanction and the proceeds are not Russian sovereign property.
But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.
There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover two-thirds of its funding needs.
One is to raise the money on capital markets, backed by the EU budget as a guarantee. This is Belgium’s preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine’s military.
That leaves loaning Ukraine cash from the Russian assets, which were originally held in securities but have now largely matured into cash. That money is Euroclear property held in the European Central Bank.
The EU’s executive, the European Commission, accepts Belgium has legitimate concerns and says it is confident it has dealt with them.
The plan is for Belgium to be protected with a guarantee covering all the €210bn of Russian assets in the EU.
Should Euroclear suffer a loss of its own assets in Russia, a Commission source explained that would be offset from assets belonging to Russia’s own clearing house which are in the EU.
If Russia went after Belgium itself, any ruling by a Russian court would not be recognised in the EU.
In a key development, EU ambassadors have agreed that Russia’s central bank assets held in Europe should be immobilised indefinitely.
Until now they have had to vote unanimously every six months to renew the freeze, which could have meant a repeated risk to Belgium.
The EU ambassadors used an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an “immediate threat to the economic interests of the union” continues, or until Russia pays war reparations to Ukraine in full.
Swedish Finance Minister Elisabeth Svantesson said the decision was an “important step in enabling more support for Ukraine and protecting our democracy”.
Thierry Monasse/Getty ImagesWhy Belgium is not yet satisfied
Belgium is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being left to handle the repercussions if things go wrong.
A usually divided political landscape in this case has rallied behind Prime Minister Bart De Wever, who is under pressure from European colleagues.
“Very important decisions” would be made by the EU in the coming week, he said during a meeting with UK Prime Minister Sir Keir Starmer in London on Friday. He added that Belgium and the UK would work together to “get the certainty that we can support Ukraine to stay a free, democratic and sovereign country”.
The EU believes it can secure sufficient guarantees for the loan itself, but Belgium fears an added risk of being exposed to extra damages or penalties.
“Belgium is a small economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill,” says Veerle Colaert, professor of financial law at KU Leuven University.
She also believes the requirement for Euroclear to grant a loan to the EU would violate EU banking regulations.
“Banks need to comply with capital and liquidity requirements and shouldn’t put all their eggs in one basket. Now the EU is telling Euroclear to do just that.
“Why do we have these bank rules? It’s because we want banks to be stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That’s another reason why it’s so important for Belgium to secure water-tight guarantees for Euroclear.”
Europe under pressure from every direction
There is no time to lose, warn seven EU member states including those closest geographically to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is “the most financially feasible and politically realistic solution”.
“It’s a matter of destiny for us,” says leading German conservative MP Norbert Röttgen. “If we fail, I don’t know what we’ll do afterwards. That’s why we have to succeed in a week’s time”.
While Russia is adamant its money should not be touched, there are added concerns among European figures that the US may want to use Russia’s frozen billions differently, as part of its own peace plan.
Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.
An early draft of the US peace plan referred to $100bn of Russia’s frozen assets being used by the US for reconstruction, with the US taking 50% of the profits and Europe adding another $100bn. The remaining assets would then be used in some kind of US-Russia joint investment project.
An EU source said the added advantage of Friday’s expected vote to immobilise Russia’s assets indefinitely made it harder for anyone to take the money away. Implicit is that the US would then have to win over a majority of EU member states to vote for a plan that would financially cost them an enormous sum.
Hungary’s Viktor Orban, seen as Russia’s closest partner in the EU, said Europe’s leaders were “placing themselves above the rules” and replacing the rule of law with the rule of bureaucrats.
Gold and silver prices have continued to drop sharply in a “brutal” sell-off after hitting record highs in recent weeks.
The precious metals began falling on Friday in response to US President Donald Trump’s nomination for the incoming chairman of the Federal Reserve.
His choice for former Fed governor Kevin Warsh to replace current chairman Jerome Powell when his term ends in May soothed some investor nerves, which boosted the US dollar but saw appetite for safe-haven investments gold and silver slump in response.
Gold and silver suffered their worst trading days for decades on Friday and were down heavily again on Monday, with spot prices off by another 7% and 11% respectively at one stage.
Silver had plunged by nearly 30% on Friday and gold dropped over 9% in its worst one-day drop since 1983.
Gold and silver had been enjoying a record breaking rally as investors sought refuge amid global geopolitical uncertainty, conflict and tariff woes.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: “The sell-off has been far more brutal than I, and many, expected.”
He added: “For silver, the rally on the way up was faster than gold’s, so the correction on the way down is faster too.”
Kathleen Brooks, research director at XTB, added: “If the sell off continues, then gold and silver are at risk of eroding their losses for the year so far.
“The historic move lower in silver prices has not stemmed a fall at the start of this week.
“Traders have not yet found a level that they are happy to buy the dips, and the timing of Chinese Lunar New Year in mid-February could accelerate the sell off, as Chinese traders reduce risk ahead of the holiday.”
UK and US stock markets are expected to open in the red on Monday, as the gold and silver rout has a knock on effect on mining giants, while Brent oil was also 5% lower.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Mining stocks are likely to feel the heat as metal prices scramble to find a floor.
“Oil prices are also trending the wrong way for investors in commodity-focused companies.”
Mumbai: Lower revenue as a share of GDP has been more than offset by cuts to subsidies and spending on current schemes, leading to the smallest fiscal consolidation in six years, likely positive for growth, a new report has said.
The fiscal consolidation for FY27 is the slowest in six years. And the budgeted disinvestment, which is a below-the-line funding item, is likely to see the highest rise in six years, the report from HSBC Global Investment Research said.
“The central government continues with fiscal consolidation, though signing up for a gentler path for FY27; the fiscal impulse will likely turn neutral after several years in the negative, and this should be good news for GDP growth,” the research firm added.
The report said that the services sector was the focus of the Budget, “with ambitious plans and increased outlays for medical institutions, universities, tourism, sports facilities, and the creative economy.”
Urban infrastructure saw a renewed push with each City Economic Region (CER) set to receive get Rs 50 billion over 5 years.
Seven new high-speed rail corridors will connect major cities, the report noted, adding large cities will also get an incentive of Rs 1 billion if they issue municipal bonds worth more than Rs 10 billion.
The report highlighted policy priorities, saying, “new manufacturing sectors were given incentives, namely biopharma, semiconductors, electronic components, rare earth corridors, chemical parks, container manufacturing, and high-tech tool rooms.”
Direct taxes are expected to grow faster than nominal GDP while indirect taxes will expand more slowly, with gross tax revenues budgeted to rise about 8 per cent year‑on‑year, the report said.
Central government set a fiscal deficit target of 4.3 per cent of GDP for FY27 after a 4.4 per cent estimate for FY26, and nominal GDP growth was pegged at 10 per cent.
Business
India’s $5 trillion economy push: How ‘C+1’ strategy could turn country into world’s factory
New Delhi: India is preparing for a major economic transformation. The Union Budget 2026-27 lays out measures that could make the country the top choice for global manufacturing using the popular ‘China +1’ (C+1) strategy. This comes as international companies rethink supply chains after COVID-19 disruptions, rising trade tariffs and geopolitical tensions.
India has positioned itself as the backup factory for the world that is ready to absorb international demand in case of any crisis in China or Taiwan.
The government has offered tax breaks for cell phone, laptop, and semiconductor makers, making India more attractive to foreign investors. Reducing bureaucratic hurdles for global firms, the budget also strengthens the National Single Window System to simplify business procedures. The message is clear: India is ready to step in as a global manufacturing hub, ensuring supply continuity for the world.
The expressway to a $5 trillion economy
China presently dominates about 40% of global manufacturing. Its factories supply critical products worldwide, but 2026 is expected to be a turning point. Expanding influence and economic opacity have made global companies seek alternatives.
India has leveraged this moment, offering a comprehensive incentive package for foreign manufacturers. Analysts call it more than policy; it is a blueprint to become a $5 trillion economy and reclaim India’s historic position as a global industrial leader.
Why the world needs India now
The COVID-19 pandemic exposed the dangers of over-reliance on a single supplier. When China halted medical exports, nations realised the need for diversified supply chains. Major companies such as Apple and Samsung now see India as a dependable alternative.
China’s aging workforce and rising labour costs further enhance India’s appeal. With 65% of its population under 35, India offers a vast, skilled and affordable workforce for decades. The geopolitical uncertainty surrounding Taiwan, which produces 90% of advanced chips, has also created demand for a secure manufacturing backup. India is stepping in to fill that gap.
How India stands to gain from China’s challenges
India’s budget, 2026-27, slashes import duties on cell phone and laptop components, turning the country into a hub for component manufacturing, not just assembly. Electronics exports are projected to cross $120 billion by 2025.
The government has also launched a Rs 1.5 lakh crore semiconductor mission, attracting companies like Tata and Micron to establish advanced chip plants in India. In the chemical sector, stricter environmental regulations in China have shut down several plants, benefiting Indian companies such as Privi Specialty and Aarti Industries, which are now filling gaps in global supply chains.
Incentives for companies
The Production Linked Incentive (PLI) scheme promises cash rewards for output, covering over 14 sectors. This is India’s answer to Chinese subsidies. From land acquisition to electricity connections, the National Single Window System now enables businesses to clear all approvals through a single portal.
Infrastructure investment has also received a massive boost, with Rs 11.11 lakh crore allocated under PM GatiShakti. New ports and dedicated freight corridors are being built to ensure that exports from India reach the world faster and cheaper than ever before.
India’s moves points to a strategic shift in global manufacturing. By rolling out the red carpet for foreign companies and investing heavily in infrastructure, technology and policy reforms, the country is poised to become the go-to destination for global supply chains. The C+1 formula is not only a concept; it is a roadmap to turn India into the next industrial superpower and a $5 trillion economy.
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