The European Union is racing to support Ukraine’s finances as the war drags on. With U.S. backing fading, Europe is now exploring a bold move — using Russia’s frozen assets to issue a €140 billion “reparations loan” for Ukraine. The plan, however, faces several political and legal hurdles.
Why Does the EU Need This Loan?
When Russia launched its full-scale invasion in 2022, the EU and G7 allies froze Moscow’s assets to cut its war funding. About €210 billion of these assets are held in Europe, mostly at Euroclear, a financial depository in Brussels. These immobilised funds generate about €2.5–3 billion a year in profits for Belgium.
So far, Europe has used part of those profits to help Ukraine. The G7 also created a €45 billion loan backed by these revenues. But with no end to the war, that support is no longer enough. EU leaders now want a larger and longer-term solution.
What Exactly Is the Reparations Loan?
The European Commission’s plan would use about €175 billion in cash from Euroclear to issue a €140 billion loan to Ukraine. The EU would give this money in stages, tied to certain conditions — such as buying European-made weapons.
Ukraine would repay the loan only when Russia ends the war and agrees to cover the damages. At that point, the EU would repay Euroclear, which would then return the funds to Russia. That’s why it’s called a “reparations loan” rather than confiscation.
The idea offers a steady lifeline to Kyiv without directly burdening EU taxpayers.
Why Is Belgium Blocking It?
Belgium, where most of Russia’s frozen assets sit, is hesitant. The country fears retaliation from Moscow and possible lawsuits. A treaty between Belgium and Russia allows arbitration if disputes arise. If the money leaves Euroclear, Russia could sue to recover it and demand huge compensation.
Belgium’s Prime Minister Bart De Wever has demanded that all EU members share the risk equally. He wants firm guarantees that if things go wrong, other countries will help cover the losses. So far, many EU leaders have shown sympathy, but not everyone is ready to commit.
What Does the ECB Say?
The European Central Bank (ECB) also plays a key role. Its president, Christine Lagarde, previously warned against any step that looks like asset confiscation, which is illegal under international law. However, she now believes the reparations loan could be possible — with more technical work.
She advised the EU to act together with G7 partners like the UK, Canada, and Japan to avoid political and legal risks.
What Do Other EU Countries Think?
Many countries, including Germany and the Netherlands, agree that Belgium should not face the risks alone. But some, like Hungary, have refused to participate. France and Italy also hesitate because of their own heavy debts.
Belgium’s internal politics complicate matters too. Prime Minister De Wever faces budget pressures at home, so taking a hard stance helps him look strong domestically. Still, the rest of the EU needs Belgium’s approval to move forward.
Are There Alternatives?
EU leaders have asked the European Commission to explore other ways to fund Ukraine. One option is to raise money directly from markets, like the €50 billion Ukraine Facility launched in 2023.
But this could add pressure on highly indebted countries like France and Italy, making it a tough sell.
European Commission President Ursula von der Leyen says the bloc agrees on the goal — helping Ukraine — but still needs to decide how to make the plan work. A revised proposal is expected before the next EU summit in December.
Ukrainian President Volodymyr Zelenskyy urged leaders to finalise the plan soon. “Ukraine needs this money in early 2026,” he said. “It’s a political decision — not everything depends on us.”