Even though critical reservations about the plan from significant stakeholder Belgium seem unresolved, the European Commission has suggested an unprecedented use of frozen Russian assets or foreign borrowing to finance Ukraine’s war effort against Russia.
The executive body of the European Union announced “two solutions to address Ukraine’s financing needs” for 2026 and 2027 on Wednesday.
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A “reparations loan” funded by Russian state assets that were frozen in the EU as a result of Moscow’s 2022 invasion of Ukraine is the first option, followed by an EU loan to Kyiv obtained from the private market.
In a press release, the Commission stated that “these options reflect the EU’s commitment to supporting Ukraine as well as the defense of its sovereignty and the maintenance of state functions as well as as as a strategic investment in Europe’s security and the pursuit of a just and lasting peace.”
Ursula von der Leyen, president of the Commission, stated to reporters that the proposals will enable Ukraine to “take the means” to defend itself and advance peace negotiations from a strong position.
“We have a proposal to provide for the next two years the financing needs of Ukraine. That’s 90 billion euros. She stated that international partners would be responsible for covering the remainder.
“We are putting more money into Russia’s aggression war.” Von der Leyen continued, “And this should serve as a further incentive for Russia to engage in negotiating.”
The president of the Commission noted that Belgium, whose Brussels-based financial institution Euroclear is the principal holder of the frozen Russian assets, had almost fully been taken into account in the proposal to EU member states.
Von der Leyen claimed that the new proposal also applies to other EU financial institutions that are holding Russian assets, while EU officials claimed that France, Germany, Sweden, and Cyprus are also holding these types of assets that will be used to fund the loan.
The Commission added that the loan, which would be issued in the form of a loan, would not amount to a confiscation; instead, Ukraine would only be required to pay back the money if Russia makes up the lost wages from the war.
If 15 out of 27 members vote in favor, the EU could move forward with the proposal for frozen assets. At a summit of EU leaders on December 18, the Commission stated that it hoped to clinch a firm commitment from the members.
The second option, which involves borrowing money from foreign markets, would typically require the EU’s members to agree on something, which could prove challenging given Hungary’s friendly government’s opposition to previous funding for Ukraine.
Belgium has repeatedly stated that it opposes the freeze plan, arguing that the proposed use of 140 billion euros ($163 billion) would put a peace deal in jeopardy and put it at risk of Russian-style crippling legal action in the future.
Brussels has a requirement that EU nations agree to pay any legal fees incurred by any pending Russian legal disputes.
Belgian Foreign Minister Maxime Prevot reiterated these reservations on Wednesday, noting that the legal documents “do not address our concerns in a satisfactory manner.”
The worst of all, according to Prevot, is that the option of the reparations loan is risky and has never been done before. This explains why we continue to advocate for an alternative, such as allowing the EU to borrow funds from the markets.
Russia, in contrast, has claimed that using its assets would constitute theft. If the plan is approved, VTB’s head, Andrei Kostin, threatened the bloc with 50 years in court on Monday.
Von der Leyen claimed that Scott Bessent, the secretary of the US Treasury, had “positively received” the news of the proposed reparation loan. Despite the complexity of the plan’s 28-point plan to end the war, which suggested putting some of the assets in a joint US-Russian investment vehicle, the report provides that assurance.
By late 2027, the EU will have made a significant step toward removing the bloc’s decades-long reliance on Russian energy, as announced earlier on Wednesday.
The European Commission’s recommendations for ending Russian energy shipments were “historical agreement” reached between the EU government and representatives of the European Parliament, according to the EU announcement.
By the end of 2026, member states will no longer import liquefied natural gas (LNG) from Russia as per the agreement. By November 2027, imports of pipeline gas will be discontinued.
The organization claimed that the move puts an end to its “dependence on an unreliable supplier,” which has repeatedly “repeatedly destabilized European energy markets, put supply security in jeopardy, and damaged the European economy.”
Von der Leyen applauded the decision, stating that “we are now in the transition to full energy independence from Russia.”
We stand with Ukraine and aim for new energy partnerships and opportunities, she said, “by pledging Putin’s war chest.”
