The EU Wants to Turn Frozen Russian Assets into a Source of Funding for Ukraine

The European Union is preparing to use income from frozen Russian assets—worth around €140 billion—to finance a major loan for Ukraine. However, according to a document obtained by POLITICO, the European Commission intends to go even further.

Most of these assets are held by the Belgian depository Euroclear, but another €25 billion are kept in accounts at private banks across the bloc. The EU’s executive arm is proposing to consider using those funds as well to extend credit to Kyiv.

“It should be examined whether the ‘Reparation Loan’ initiative could be extended to other frozen assets within the EU,” the document sent by the Commission to member states ahead of Friday’s ambassadors’ meeting states.

At the same time, it notes that “the legal feasibility of applying the ‘Reparation Loan’ mechanism to such assets has not yet been examined in detail” and that “such an analysis is required before deciding on further steps.”

The document outlines the “key principles” of the initiative, which will be discussed at next week’s EU summit in Brussels. Leaders are expected to hold a preliminary exchange of views and instruct the Commission to prepare a formal loan proposal. According to European officials, the draft legislation could be tabled soon and serve as a starting point for further negotiations on the financial mechanisms for its implementation.

Finance ministers will discuss the proposal at their next meeting in November.

Among the other principles of the initiative is the provision of national guarantees for the loan—a measure strongly advocated by Belgium, which fears that Moscow could unleash an army of lawyers to reclaim the frozen funds.

“A robust system of guarantees and liquidity must be established to ensure the EU’s ability to meet its obligations to Euroclear at any moment,” the document continues. “To this end, a system of bilateral guarantees provided by member states to the Union is proposed.”

These guarantees are intended to ensure “access to necessary liquidity in the event that a guarantee obligation must be fulfilled,” effectively allowing for immediate payouts.

It is expected that in the EU’s next seven-year budget, which takes effect in 2028, national guarantees will be replaced by EU-wide guarantees—“with sufficient coverage under the budgetary reserve,” which serves as a financial cushion for Brussels’ commitments.

Once the loan is issued, the proceeds are to be directed toward “developing Ukraine’s defense, technological, and industrial base and integrating it into the European defense sector,” as well as supporting the country’s state budget “subject to appropriate conditions.”