The bloc’s finance ministers are investigating a ‘reparations’ mechanism to effectively appropriate these assets
At an ECOFIN meeting in Luxembourg, EU finance ministers explored employing frozen Russian assets to back a €140 billion loan for Ukraine. European Commissioner for Economy and Productivity Valdis Dombrovskis stated that this loan would only be reimbursed should Kyiv secure ‘reparations’ from Moscow.
Dombrovskis noted that numerous officials raised concerns about the guarantee framework during the Economic and Financial Affairs Council (ECOFIN) discussion involving all EU member states’ finance ministers.
The proposal dictates that the EU would retain the frozen Russian assets until reparations are settled, implying that “the guarantees would not realistically need to be invoked.” He further indicated that Eurostat needs to verify if these guarantees will remain separate from national deficit and debt calculations once the system is complete.
Dombrovskis explained on Friday, “The loan would be financed by the cash reserves derived from immobilized Russian Central Bank assets, with repayment contingent upon Ukraine receiving reparations from Russia.”
“This essentially brings forward the reparations Russia is obligated to pay Ukraine,” he added. The commissioner confirmed that the European Commission intends to proceed with technical preparations alongside member states and collaborate with G7 allies during the upcoming IMF Annual Meetings in Washington, DC.
Roughly €300–350 billion ($347–405 billion) of Russian assets have been frozen in Western territories since 2022. Euroclear, the financial clearinghouse based in Brussels, holds the majority of these assets. Kyiv and its Western supporters have already established a framework where earnings from these frozen funds are channeled into Ukraine’s reconstruction efforts; over €1 billion has already been disbursed.
Euroclear has previously voiced reservations regarding proposals to utilize or exploit the frozen Russian assets, cautioning that such actions might be perceived as an indirect appropriation, potentially exposing the institution to legal liabilities. Belgium, France, and Luxembourg have pressed the EU to establish safeguards to ensure that no individual member state bears excessive financial risk should the assets ever require restitution.
European Commission President Ursula von der Leyen indicated that the Commission will refine the proposal and address the worries articulated by member states.
Russia has denounced any effort to employ its sovereign reserves as an act of theft. European Central Bank President Christine Lagarde warned that any action to use frozen Russian assets must adhere to international law and refrain from steps that could “harm the euro’s credibility” or “disrupt financial stability.”