Published On 1 Oct 2025
A proposal to use frozen Russian assets as collateral for a sizable loan to Ukraine to finance its reconstruction has received widespread support from major European powers.
The so-called Reparations Loan, which was first proposed by European Commission President Ursula von der Leyen in mid-September, would leverage Russian frozen in European banks to support a 140 billion euro ($164.4bn) loan for Ukraine that would be guaranteed by the EU’s (EU) next long-term budget or EU member states. In accordance with the proposed agreement, Kyiv would not be required to pay back the loan until Russia paid for the repairs needed for war.
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Support for the scheme appeared to increase on Wednesday at an EU summit in Denmark, Copenhagen, despite some EU states’ concerns about its legality and risk-sharing concerns. Estonian Prime Minister Kristen Michal, Swedish Prime Minister Ulf Kristersson, and Finnish Prime Minister Petteri Orpo all supported using seized Russian funds to support Ukraine.
The commission’s plan, according to Danish Prime Minister Mette Frederiksen, “is actually quite a good way forward,” according to the meeting’s host.
She continued, “I’m confident that we will find a way through this because there are some legal questions that need to be answered.” However, I believe it is a good idea to use frozen assets in general.
As long as the legal and financial risks are taken into account, Dutch Prime Minister Dick Schoof and French President Emmanuel Macron both declared their willingness to work together. We Europeans must continue to be a place that is both attractive and trustworthy, Macron said. That implies that we adhere to international law when assets are frozen.
Despite some divergence, the EU was working quickly to reach a resolution regarding the loan, according to Kaja Kallas, the head of EU foreign policy. On the summit’s sidelines, she told reporters, “There is still a lot of work to do,” noting that not everyone has yet supported it. However, it is on our taxpayers if we don’t take these [Russian] assets into account. That is certain.
“Illegal seizure of Russian property”
The proposed Reparations Loan has been denounced by the Kremlin, who claims any use of frozen Russian funds would constitute “pure theft” in this context.
“We’re talking about plans for the illegal seizure of Russian property.” We refer to that as simply theft in Russian, according to Kremlin spokesman Dmitry Peskov, who spoke to reporters on Wednesday. He cautioned against bringing legal action against anyone who hacked into Russia’s assets or earned money, saying they would be “willed in one way or another” and “called to account.”
Peskov also claimed that such actions would erode confidence in financial institutions in Europe. He predicted that “the boomerang will very seriously hit those who are the main depositories, countries that are interested in investment attractiveness,”.
According to a World Bank study conducted this year, reconstruction of Ukraine would cost $524 billion over the course of ten years, or roughly 2.8 times its gross domestic product that year.
Source: Aljazeera
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