European Union finance ministers have agreed that funding Ukraine through a reparations loan backed by frozen Russian assets is the most effective option among three being considered to assist Kyiv. European Commission President Ursula von der Leyen presented three potential methods for financing Ukraine’s needs for 2026 and 2027: the EU could borrow against its long-term budget, individual EU countries could borrow and provide grants, or a loan could be arranged using frozen Russian central bank assets. Danish Economy Minister Stephanie Lose emphasized that the Commission’s proposal for a loan based on these frozen assets should be a top priority.
This plan is appealing to EU finance ministers as it doesn’t increase national debt and could provide Ukraine with up to 140 billion euros ($163.3 billion) to meet its estimated financial needs. Most of the frozen assets are held in Euroclear, and the plan involves replacing these assets with zero-coupon AAA bonds issued by the European Commission, allowing the cash to flow to Kyiv. Ukraine would only need to repay the loan if reparations from Russia are received, effectively turning it into a grant.
However, Belgium, which manages Euroclear, fears it may be liable if Russia sues to reclaim assets. Belgium seeks guarantees from EU nations for repayment within three days if needed and wants a strong legal basis for the operation. The Commission is currently negotiating with Belgium to secure broader EU support by December.
With information from Reuters