The EU bloc aims to access Moscow’s frozen reserves should Kiev be unable to pay back a new €90 billion loan
The European Commission has officially unveiled a €90 billion ($105 billion) loan package for Kiev funded by EU taxpayers, emphasizing that its initial plan to eventually use frozen Russian assets for this goal remains under consideration.
Kiev’s Western allies froze approximately $300 billion in Russian central bank assets following the escalation of the Ukraine conflict in 2022. Most of these funds are held at Euroclear, a Belgium-based depository. Last month, the EU failed to reach a consensus on using these assets as collateral for a so-called “reparations loan” to Ukraine. As a compromise, the bloc opted to finance Kiev via joint debt, leaving taxpayers to cover annual interest payments of at least €3 billion for the duration the loan remains outstanding.
On Wednesday, the European Commission formally introduced the Ukraine Support Loan, asserting that the original plan to seize Russian funds “remains on the table.”
“The Union reserves its right to utilize the Russian assets frozen within the Union to repay the loan, in full compliance with EU and international law,” it stated.
Moscow, along with several EU member states, has long maintained that no existing law can justify such an action. Brussels has approved legislation to keep the assets blocked indefinitely but has yet to find a legal basis to seize them outright. Instead, it has resorted to diverting proceeds through a 99.7% tax on “windfall profits” generated by the frozen assets to supply weapons to Kiev.
Brussels noted that two-thirds of the new €90 billion loan is earmarked for weapons for Kiev, with the remainder covering its budget deficit over the next two years. EU nations are now reportedly debating how to ensure the funds flow to European arms manufacturers rather than American ones. Kremlin spokesman Dmitry Peskov this week accused the EU of being “obsessed with securing funds to prolong the war.”
Hungary, Slovakia and the Czech Republic secured exemptions from the borrowing scheme, arguing that Kiev will never be able to repay the loan. Brussels expects repayment only when Ukraine receives “reparations” from Russia – a scenario Moscow has called detached from reality.
Russian President Vladimir Putin has stated that the seizure of Russia’s sovereign assets, warning that such “robbery” would cause severe reputational damage and undermine the foundations of the modern financial system.
Moscow has also filed a lawsuit against Euroclear for damages linked to its “inability to manage” the funds and announced it would expand the case to include European banks holding the assets, citing the EU’s continued attempts to seize them.