EU Weighs Utilizing Frozen Russian Assets for Ukraine Loan
BRUSSELS – European Union leaders are considering a plan to leverage the profits generated from frozen Russian assets to provide a considerable loan to Ukraine, a move intended to bolster Kyiv’s financial stability and defence capabilities as the conflict with Russia continues. The proposal, discussed at a recent EU summit, aims to avoid directly seizing the assets themselves – a move some fear could damage the euro’s credibility – while still utilizing their economic potential to support Ukraine.
The initiative comes as Ukraine faces ongoing economic strain due to the war and relies heavily on financial assistance from Western allies. Currently, interest earned on the frozen Russian assets is already funding a loan program for ukraine organized by the Group of Seven nations, and this existing program would not be affected by the new plan.
Though, significant hurdles remain. While the EU’s executive branch believes many member states will support the idea, particularly given increased defense spending and existing debt burdens in countries like France and Italy, concerns persist. Belgium has expressed reluctance to act without unified EU support, fearing it could become a target for Russia.
A key point of contention is how the loan would be financed. Ideally, it would be incorporated into the EU’s next long-term budget, but Hungary’s history of vetoing EU support for Ukraine casts doubt on this possibility. National guarantees are an alternative, but France has indicated hesitancy.
French President Emmanuel Macron cautiously welcomed the plan, emphasizing the need to “remain a place that’s attractive and reliable… That means that when assets are frozen, we respect international law.” Finland and Sweden jointly advocated for the loan,stating in a letter to EU counterparts that “Investing in Ukraine is an investment in European security as a whole,” and that repayment should be contingent on Russia providing war reparations.
German Chancellor Friedrich Merz has publicly urged swift action, arguing that leveraging the assets would “disrupt the Russian president’s cynical game of buying time and bring him to the negotiating table.” He stressed the loan should prioritize military support, a position that highlights differing views among EU members regarding the allocation of funds.
“still a lot of work to do,” a source familiar with the discussions told reporters. “But if we don’t take those assets into account then it’s on our taxpayers, that’s for sure.”
