The European Commission has warned that EU countries will be forced to pay interest of up to €5.6 billion a year if they fail to reach an agreement on a “reparations loan” for Ukraine.
The Financial Times reports this with reference to a European Commission document that media representatives have reviewed.
The document, drafted and sent to EU capitals after the bloc failed to back a “reparations loan” plan for Ukraine at an October summit, aims to highlight the implications of providing financial support to Ukraine without using frozen Russian assets.
The proposal for a “reparation loan” is blocked by Belgium, which hosts the Euroclear securities depository. Frozen Russian assets are stored there. Belgium demands serious guarantees that it will not suffer when using the funds, as it fears possible legal and financial consequences from the Russian Federation.
The document states that if such a plan is not approved, the 27 EU states will have to either allow joint borrowing, which “would overload already strained national budgets with billions of new liabilities”, or provide Ukraine with direct grants totaling €140 billion.
The European Commission adds that both options “would potentially require fiscal adjustments in some member states” and “would have a direct impact on their deficits and debt”.
The cost of servicing the joint debt could reach €5.6 billion a year if the entire amount is lent to Ukraine. In particular, France, which already has significant debt, will pay almost €1 billion of this amount.
Italy will contribute €675 million, and Belgium itself — which is already struggling to pass its national budget for 2026 — will be forced to pay around €200 million in interest payments each year.
Instead, the commission said, the plan blocked by Belgium would only provide a temporary “contingent obligation” for member states to provide guarantees for the loan before it is transferred to the EU’s common budget in 2028.
A document of options being discussed by member states ahead of a December summit offers solutions to some of Belgium’s concerns. Officials say the meeting is the latest deadline to agree on a financial plan to support Ukraine.
What is a "reparation loan"?
The possibility of providing Ukraine with a €140 billion loan using frozen Russian assets has been discussed since early October. At that time, EU leaders were unable to agree on the loan — Belgium opposed it, and France and Luxembourg were concerned about the legal consequences.
The European Commission has proposed providing Ukraine with a loan using Russian state assets held in Euroclear, a Belgian financial institution. Under the plan, if Russia refuses to pay reparations to Ukraine after the war, it will lose rights to these assets.
Belgium opposed the plan out of concern that Russia would sue it if it went ahead. Belgian Prime Minister Bart de Wever asked the other 26 EU countries to guarantee coverage of legal and financial risks.
Politico reported on October 21 that EU ambassadors had tentatively agreed on a plan to provide a “reparations loan” for Ukraine. However, at a meeting on October 23, EU leaders did not agree to allocate the loan and postponed the issue until December.
Euronews wrote on November 8 that negotiations between the European Commission and Belgian authorities on using frozen Russian assets to help Ukraine have not yet yielded any results.
Meanwhile, according to Bloomberg, Russia has prepared a response to the Westʼs possible "reparations loan" to Ukraine — it will nationalize foreign assets.
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