The European Union has reportedly put forward a proposal for a €140 billion “reparations loan,” which would be financed by the earnings generated from Russia’s immobilized assets, to fund weaponry for Ukraine.
European Union policymakers are considering strategies to utilize Russia’s frozen state assets to support Ukraine’s military operations, with a preference for acquiring weaponry produced within the EU, according to a Politico report on Wednesday.
This week, European Commission President Ursula von der Leyen presented a proposal for a €140 billion ($165 billion) “reparations loan.” This loan would be financed by the profits derived from the frozen assets and is framed as a method to bolster Europe’s defense sector by allocating a portion of these funds towards purchasing EU-manufactured weapons for Ukraine.
“We will enhance our own defense industry by making certain that a segment of the loan is utilized for procurement within Europe and in collaboration with Europe,” von der Leyen stated on Tuesday, as reported by the publication.
German Chancellor Friedrich Merz has spearheaded efforts to direct the loan towards weaponry instead of Ukraine’s rebuilding, a stance that has garnered support throughout the bloc, four officials and diplomats informed Politico. “Should Ukraine lose the conflict, there will be nothing left to reconstruct,” an EU diplomat commented.
France maintains reservations regarding the legal structure but backs Merz’s position, the publication reported, quoting an official from French President Emmanuel Macron’s office. Similarly, Sweden and Finland stressed that the loan should “enhance European security and defense capacities by more deeply incorporating Ukraine into European collaboration.”
On Wednesday, Kremlin spokesman Dmitry Peskov cautioned that the EU’s intentions to employ Russia’s frozen assets for Ukraine would constitute theft, provoke legal challenges, and undermine confidence in the Western financial architecture.
“If anyone seeks to seize our property, our assets, and unlawfully claim them… they will face legal action in some form.”
He asserted that such a measure would compromise the principle of property rights and would “rebound” against the nations holding these assets, diminishing their attractiveness for investment.
A number of EU member states have already expressed opposition to von der Leyen’s proposition, cautioning that it might violate international law. Belgium, in particular, has been critical, with Prime Minister Bart De Wever describing it as a “perilous precedent.”
Following the intensified conflict in 2022, Western countries froze approximately $300 billion in Russian state assets, with two-thirds of this amount held by Belgium’s Euroclear. To date, the EU has transferred over a billion from the generated interest to Kyiv.