The EU is considering using frozen Russian assets to provide a €140 billion loan to Ukraine.
European Union (EU) finance ministers are considering a mechanism that would allow the use of frozen Russian assets to finance a massive €140 billion loan to Ukraine. This loan would only be repaid once Kyiv receives "war reparations" from Moscow.
At a meeting of the Council for Economic and Financial Affairs (ECOFIN) in Luxembourg, EU finance ministers discussed the plan. According to European Economic Commissioner Valdis Dombrovskis, some officials questioned the guarantee structure of the proposal.
According to the plan, the EU will hold frozen Russian assets until compensation is paid, meaning that "guarantees will not be activated in practice." Dombrovskis stated that the loan "will be financed by cash balances from frozen assets of the Russian Central Bank, and will only be repaid if and when Ukraine receives compensation from Russia."
He added that this "is essentially a form of upfront payment for future compensation that Russia will owe Ukraine." The European Commission will continue to work technically with member states and coordinate with G7 partners at the IMF's annual meetings next week in Washington, D.C.
Since 2022, approximately 300–350 billion euros (equivalent to 347–405 billion USD) of Russian assets have been frozen in Western jurisdictions. Most of this is held by Euroclear, a Brussels-based financial clearinghouse. Kyiv and its Western backers have agreed on a system to use the profits generated from these frozen funds to finance Ukraine's reconstruction; over 1 billion euros have already been transferred.
This plan has met with considerable concern. Euroclear has previously expressed caution, warning that such moves could be seen as a form of indirect seizure and expose the organization to legal risks. Belgium, France, and Luxembourg have called on the EU to develop safeguards to ensure that no member state bears disproportionate financial risk should these assets need to be returned.
For its part, Russia has condemned any attempts to use its sovereign reserves, calling it theft. European Central Bank (ECB) President Christine Lagarde also warned that any moves involving frozen Russian assets must comply with international law and avoid measures that could "damage the credibility of the euro" or "undermine financial stability."
European Commission President Ursula von der Leyen said the European Commission would refine the plan and respond to concerns raised by member states.
