EU summit: Bloc announces new Russia sanctions package

We're closing the blog and will be back with more analysis on the topic of funding Ukraine, and a fresh blog with the latest news on Russia's war in Ukraine.

European Union leaders have agreed to allow more flexibility in achieving the yet-to-be-decided emission reduction target for 2040 in light of economic concerns.

A joint statement released on Thursday stressed "the need for a revision clause" of the upcoming target.

This assessment is to be carried out "in light of latest scientific evidence, technological advances, and evolving challenges to and opportunities for the EU's global competitiveness."

In addition, leaders called for a revision of the phase-out of combustion vehicles in the EU planned for 2035.

The EU is trying to pass a new target to cut net greenhouse gas emissions 90% by 2040 to put the bloc on track for net-zero emissions by 2050.

But many businesses complain they are being asked to invest in greening their operations at a time when trade tensions and competition from China are squeezing returns. 

"Europe's climate ambitions and the competitiveness of our economy go hand in hand," wrote European Council President Antonio Costa, who chaired the talks, on X.

The EU leaders on Thursday to proceed with the 2040 target, but leave details for ministers to approve at a meeting scheduled for November 4.

EU heads of state and government gathered in Brussels and declared their support in principle to fund Ukraine through 2026 and 2027.

But the bloc is yet to put forth a concrete proposal to do so, pushing the decision to December, EU Council chief Antonio Costa announced.

"Russia should take good note of this. Ukraine will have the financial resources it needs to defend itself against Russia's aggression and in the foreseeable future. The technical, legal and financial aspects of Europe's support need to be worked on, and we will return to this issue in the December European Council," Costa said.

EU leaders were debating the legal risks of using frozen Russian Central Bank assets as collateral for a massive loan to aid Ukraine.

Belgium, which holds most of that money, has asked the bloc for more reassurances before doing so.

EU countries also have different ideas about how Kyiv should spend the money. Germany, for example, has said the funds should be used to fund Ukraine's defense alone, not general spending to keep the country running.

Ultimately, the leaders left it to the European Commission, the EU's executive arm, to work out options for how to provide that financing to Kyiv in the next summit, to be held in December.

 

After hours of deliberations in Brussels, all EU leaders except Hungary have approved a statement committing to "addressing Ukraine's pressing financial needs" for the next two years and asking the bloc's executive to draw up "options for financial support."

If you read between the lines, that's a cautious reference to the longstanding debate over whether and how to leverage hundreds of billions of dollars' worth of Central Bank of Russia assets frozen in Europe to support Ukraine.

The fact that key holdout Belgium signed the text means there may be some momentum to move forward.

But that wording is also much vaguer than expected — so we'll likely see months of legal and political wrangling ahead over who takes on the financial and legal risks of the plan.

For Ukraine and its president, Volodymyr Zelenskyy, the outcome of the EU summit in Brussels on Thursday could have been worse: "There are sanctions on Russian oil, no meeting in Hungary without Ukraine. But no Tomahawks yet," he said, providing a short summary of the mixed results of recent diplomatic efforts.

"Russia has to pay for this war," he said, urging the EU to move forward with using frozen Russian assets to fund Ukraine’s defense and reconstruction.

EU heads of state and government are discussing the measure, but it seems it could be difficult to reach an agreement on giving Ukraine the €140 billion (around $162.5 billion) in Russian assets stored in Belgium to purchase weapons. Belgium, in particular, has legal concerns about the move.

If the money ends up flowing, Zelenskyy has clear priorities.

“First of all, we need to use any kind of Russian money for Ukrainian production. It’s cheaper and quicker,” he said.

The Ukrainian president also stressed the importance of co-production with European partners, especially in areas like drones, electronic warfare, and artillery rounds.

Zelenskyy rejects making territorial concessions to Russia

On the topic of peace, Zelenskyy was cautious. "The plan begins with the will to sit and speak, not to stand and fight," he said. He insisted that Russia must show genuine intent to end the war, starting with a ceasefire.

Asked about land swaps in possible negotiations with Russia, Zelenskyy was firm in dismissing the idea.

"It’s not a swap when you exchange your territory for your territory. It’s about our sovereignty. It’s not acceptable," he said. "It’s not the swap when you change nothing to territory. You can’t trade your own country."

Despite the challenges, Zelenskyy showed a hint of hope: "Each day brings something. I don’t know, maybe tomorrow we will have Tomahawks."

Although China is not explicitly on the agenda at Thursday's European Union leaders' summit, one European diplomat told the AFP news agency: "But unfair trade practices are — and you know where they come from."

Indeed, as EU leaders met in Brussels, the bloc's Official Journal showed that two major Chinese oil refiners had been added to its Russia sanctions list.

The two refineries, Liaoyang Petrochemical and Shandong Yulong Petrochemical, which have a combined production capacity of 600,000 barrels per day, are not the first Chinese companies to be sanctioned in connection with Russia's ongoing invasion of Ukraine, but they are economically significant.

The EU said the oil companies were significant buyers of Russian crude oil and therefore provided a "substantial source of revenue" to Moscow. The Chinese Foreign Ministry is yet to comment.

Also added to the sanctions list were Chinaoil Hong Kong, a trading arm of PetroChina, and Tianjin Xishanfusheng International Trading Co. The EU claims the latter has played a significant role in Russia's efforts to circumvent sanctions.

"It has exported goods of Union origin to entities in Russia whose direct export from the Union to Russia is prohibited," read the journal entry.

EU takes aim at Chinese chip industry

Oil isn't the only sector where China-EU are strained; the electronic chip industry is also a key economic and technological battleground.

Arriving at Thursday's summit, Dutch Prime Minister Dick Schoof insisted, for example, that the Netherlands' seizure of Chinese chipmaker Nexperia in September was not a "measure against China," but rather related to "mismanagement."

But European carmakers have warned the row risks causing stoppages and disruption on car production lines,especially after Beijing announced new controls on the export of rare-earth technologies and materials earlier this month.

Chinese Commerce Minister Wang Wentao is expected in Brussels next week for talks which the EU hopes will resolve the issue, but the bloc's economy chief, Valdis Dombrovskis, warned in an interview with German newspaper Handelsblatt that Brussels was "examining possible countermeasures should the conditions not improve."

"The Chinese leadership must understand that we cannot accept what is currently happening," German Chancellor Friedrich Merz told reporters before heading into the Brussels meeting. "Nevertheless, we are striving to find a mutual resolution and do not wish to escalate the conflict."

In addition to global geopolitical issues, the European Union's climate targets are also on the agenda in Brussels today.

Despite pushback on green measures from some member states, the EU is trying to pass a new target to cut net greenhouse gas emissions 90% by 2040 which would put the bloc on track for net zero emissions by 2050 – seen as an essential step to avert the worst impacts of global warming.

But some states have raised concerns as to how to fund the low-carbon transition while also prioritizing defense spending and economic rejuvenation.

"None of us are questioning the goal of climate protection," said German Chancellor Friedrich Merz. "But all of us are of the opinion that we must combine this with the competitiveness of European industry."

Finland's Prime Minister, Petteri Orpo, concurred, saying: "We have to take care of our climate goals, but we need flexibility."

Dutch Prime Minister Dick Schoof said he expected the EU to stick to its climate goals – which official data suggest the bloc is largely on track to meet by 2030 at least – but cautioned: "We will have to take a good look at how we keep them feasible for citizens and corporations."

In addition to furthering their commitment to supporting Ukraine, European leaders are also discussing their own defense policies – as well as other global issues such as the crisis in the Middle East.

On European defense, Danish Prime Minister Mette Frederiksen said that the continent finds itself in a "special security policy situation of great turmoil," which is why "European rearmament is the most important thing."

Top EU officials believe that Russian could be ready to take aim at another European country within 3-5 years, and so Frederiksen predicted that, following steps to be taken in Brussels in Thursday, Europe would have "a real ability to defend itself by 2030 at the latest."

Meanwhile, EU leaders will also be debating what role the bloc can and should play in the Middle East peace process after a US-brokered ceasefire came into effect in Gaza earlier this month.

The EU is the world's biggest provider of aid to the occupied Palestinian territories but has exerted little leverage over Israel, partly due to internal differences. For instance, while member states such as Ireland, Spain, France, Poland and Romania have officially recognized Palestinian statehood, others including Germany, Italy, Austria and Greece do not.

"This can be a game changer," said Finnish Prime Minister Petteri Orpo as he arrived at the EU summit. The stakes are high — the EU is discussing how to unlock €140 billion in frozen Russian assets. Most of the money is held at Euroclear, a financial service provider, in Belgium.

Most EU leaders agree that it should be used to buy weapons for Ukraine and provide long-term financial security, but Belgian Prime Minister Bart De Wever is sounding the alarm.

He pointed to legal, financial, and geopolitical risks. Belgium fears it would be hit hardest by Russian countermeasures.

"These assets are not just frozen," De Wever said. "They are sovereign and immobilized. Confiscating them would be historically unprecedented. Even during the Second World War, immobilized assets were never touched."

Belgium laid out three conditions before it will support any move to give the funds to Ukraine.

First, mutualization of risk: "We want guarantees. If the money has to be paid back, every member state must chip in. The consequences cannot only be for Belgium."

Second, joint financial guarantees. "Belgium cannot do it alone," he said.

Third, other countries must act too. "We know there are vast amounts of Russian money in other countries. They’ve always been silent about this. Everyone who holds immobilized assets has to move together."

German Chancellor Friedrich Merz has supported the proposal, while admitting negotiations won't be easy. "We will make progress," he said on his arrival to the summit. If all member states agree, the European Commission would need to draft a legally watertight procedure.

Meanwhile, Moscow is watching closely. A spokesperson from Russia’s Foreign Ministry warned that confiscating Russian assets would trigger a "painful response."

The question of what to do with hundreds of billions of dollars' worth of Russian financial assets frozen in European bank accounts since the full-scale invasion of Ukraine in 2022 has long been a subject of debate among Kyiv's allies.

On Thursday, Swedish Prime Minister Ulf Kristersson said that there was "broad support" within the European Union for plans to use interest accumulated on the frozen assets to finance the Ukrainian war effort – or at least to help fund post-war reconstruction in the form of Russian reparations.

"I won't declare victory on this until we're done but I see a very broad support for using frozen Russian assets," Kristersson said ahead of the EU summit in Brussels.

"It is Russia that has destroyed large parts of the country," added Danish Prime Minister Mette Frederiksen. "Therefore, I think it is quite natural that it is Russia that pays for the weapons that Ukraine needs to be able to defend itself."

However, concerns remain regarding the legality of confiscating the assets and the potential liability of individual states – in particular Belgium, where the largest tranche of frozen assets, some $225 billion (€194 billion) worth, is held by Belgian institution Euroclear.

European Council President Antonio Costa welcomed Ukraine's Volodymyr Zelenskyy to Brussels on Thursday as president of a "future member of the European Union," and reiterated the bloc's support for Kyiv.

Costa reaffirmed to Zelenskyy that "we need to support your fight for a just and lasting peace" and said the EU would "take the political decisions to ensure the financial needs of Ukraine for 2026 and 2027, including the acquisition of military equipment."

Costa said the EU was sending a "very strong message to Russia," insisting that Moscow "cannot believe that we are tired. We are not tired; we are here to continue to support Ukraine, diplomatically, politically, military, and financially."

Arriving in Brussels to take part in a one-day summit with other European leaders, Ukrainian President Volodymyr Zelenskyy said the new sanctions were "very important" and "will work."

"Russia is not showing any signs that they want to stop this war," he said. "They're still attacking us: kindergartens, schools, civilians, they're increasing the pressure. We have to pressure on [Russian President Vladimir] Putin to stop this war."

Zelenskyy also thanked US President Donald Trump, who signed off on US sanctions against Russia on Wednesday after complaining that his efforts to talk to Putin about ending his war in Ukraine were "not going anywhere."

Posting on social media as he arrived in Brussels, Zelenskyy thanked Trump for a "resolute and well-targeted decision" and said sanctions from Washington were a "clear signal that prolonging the war and spreading terror come at a cost."

The European Union on Thursday announced a series of new sanctions against Russia, banning imports of Russian liquified national gas (LNG) and targeting Moscow's shadow fleet of oil tankers.

The raft of sanctions, the 19th such package slapped on Russia since its full-scale invasion of Ukraine in February 2022, is aimed at weakening Russia's oil-dependent economy and thus impacting Moscow's ability to fund its war.

"Today is a good day for Europe and Ukraine," said Danish Foreign Minister Lars Lokke Rasmussen in a statement – since Denmark currently holds the rotating EU presidency.

He added that the new sanctions would "introduce new and comprehensive measures on oil and gas, the shadow fleet and Russia's financial sector."

Hello and welcome to DW's coverage of the European Union leaders' summit in Brussels on Thursday, October 23.

Ahead of the start of the summit, the EU announced a 19th sanctions package targeting Russia's oil sector in the hope of reducing Moscow's capacity to wage war on Ukraine.

Ukrainian President Volodymyr Zelenskyy is also attending the summit and was welcomed as a "future member of the EU."