Politico: Great Britain proposes to provide loans to Ukraine using frozen Russian assets

The British government is considering financing a new wave of loans to Ukraine with billions of pounds of Russian state assets frozen in the UK.

Politico writes about this.

Although most of Russiaʼs assets — €185 billion — are frozen in the EU, around £25 billion is still held in the UK.

UK Finance Minister Rachel Reeves presented an initiative to use these funds for loans to Ukraine at a meeting of EU finance ministers on September 20 in Copenhagen.

She did not provide specific details on how the plan would work, but stressed that the loans would comply with international law and would not involve the permanent confiscation of Russian state assets.

Politico writes that this £25 billion is planned to be used for the UK’s “reparations loan” program, which, according to the country’s Ministry of Finance, “will work in synchrony” with the EU program.

The ministry added that proposals “under consideration” could “unlock funding for the full value of assets held in the UK.

The Financial Times recently reported that the European Union has begun discussing ways to use frozen Russian assets under a €170 billion “reparations loan” mechanism for Ukraine. Russia will only be able to get them back if it agrees to pay reparations.

Under this scheme, Brussels could provide Ukraine with up to €172 billion in loans, exchanging frozen Russian funds for interest-free bonds.

The EU hopes that replacing cash with EU-guaranteed debt will avoid accusations of outright confiscation of funds. But Euroclear, the private depository that holds Russian assets, has warned of the risks to legal standing and financial soundness if such action is taken.

The European Central Bank opposes the outright removal of frozen assets and appears to have reservations about the EU’s plan for “reparation loans”. At a press conference in Copenhagen on September 19, ECB President Christine Lagarde said: “Our concerns have been expressed before and remain the same”.

Frozen Russian assets

The value of frozen Russian sovereign assets in the EU is almost €211 billion. In total, the European Union, the G7 countries and Australia have frozen approximately €260 billion in securities and cash.

In October 2024, the EU Council finally approved a loan of up to €35 billion to Ukraine. This money is the blocʼs contribution to the G7 initiative to provide Ukraine with a $50 billion (€45 billion) loan, which will be repaid with the proceeds from frozen Russian assets.

A few days after the EU Council decision, the G7 countries agreed to a $50 billion loan for Ukraine using proceeds from Russiaʼs frozen assets. The US contribution was $20 billion.

• The European Commission on August 29 began developing a mechanism to transfer almost €200 billion of frozen Russian assets. The EU is considering transferring the assets to a “special purpose holding company” supported by the G7 countries.
• The €18 billion from the EU will be paid in full by the end of the year — which is why they are again looking for a new solution regarding frozen Russian assets.

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