The European Commission presented two options for financial assistance to Ukraine: a reparations loan from frozen Russian assets and a loan from the EU budget.
This became known from the European Commission website.
Politico has obtained a European Commission document detailing how the funds from a possible €165 billion reparations loan will be distributed: €25 billion in frozen Russian state assets held in private bank accounts across the European Union, and €140 billion held at the Belgian financial institution Euroclear. It is part of a broader financial package worth €210 billion.
- €115 billion will be allocated to finance Ukraineʼs defense industry;
- €50 billion will cover Ukraineʼs budget needs;
- €45 billion will be used to repay the loan that the G7 provided to Ukraine in 2024.
The main stumbling block remains the Belgian governmentʼs resistance to the loan. Belgium is worried that one of the pro-Russian EU countries, such as Hungary or Slovakia, could block the extension of sanctions against Russia.
In that case, Brussels would have to immediately return to Moscow the money it can lend to Ukraine. The government is demanding financial guarantees from EU countries if Moscow successfully returns the money.
The European Commissionʼs announcement states that the reparations loan plan includes guarantees for member states and their financial institutions against possible retaliatory actions [by Russia].
Politico reported the day before that the European Commission had proposed a mechanism that would allow frozen Russian funds to be used without risk to Belgium. To take away the ability of individual member states to block sanctions, the European Commission is proposing to change the rules for extending them.
The Commission wants to use Article 122 of the EU Treaty, which allows for qualified majority voting when it comes to economic security. Then Hungary would not be able to block the extension of sanctions.
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 the 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.
- On Wednesday, December 2, Politico, citing sources, reported that European governments are accusing Belgium of making excessive demands on guarantees if the Kremlin sues them over the use of frozen Russian assets, which they believe could derail negotiations with Russia.
For more news and in-depth stories from Ukraine, please follow us on X.