Russia's frozen billions: how the EU is shaping a "reparation loan" for Ukraine from 210 billion euros

For years, the European Union pretended that Russian money in its banks was simply “sleeping” and dutifully waiting for the end of the war. Now this legend is crumbling: tens of billions are needed for Ukraine, and voters feel sorry for their own budgets. They came up with a solution that was both elegant and nervous at the same time – to take out a loan secured by Russia’s frozen assets, calling it a “reparations loan”. Formally, it seems that no one is stealing anything, in fact – Putin is being billed in advance, even before the tribunal.

The Associated Press writes that before the December summit, EU leaders are considering a plan that would allow them to raise up to 90 billion euros for Ukraine in 2026-2027 from frozen Russian assets, primarily the reserves of the Central Bank of the Russian Federation in Euroclear in Belgium.¹ In total, about 210 billion euros of sovereign Russian money is "on ice" in Europe, and together with assets in the US, Britain, and other G7 countries, the amount reaches 290 billion euros - this is more than enough to cover the lion's share of Ukraine's defense and reconstruction financing needs for the coming years.^{1 2 4}

What is a "reparation loan" and why is it not confiscation (on paper)?

The European Commission is proposing a structure that allows politicians to say the magic phrase “we are not confiscating anything.” The point is that the EU is not seizing Russian assets themselves, but is issuing its own debt securities, raising up to €90 billion on the market to secure Russia’s frozen reserves and future reparations.^{1 3} The proceeds from the placement of these assets (interest and other income already generated by Euroclear) are used to service the interest on the new loan, and the EU hopes to receive the principal amount from Russia someday - after it loses in court or agrees to reparations as part of a peace agreement.^{1 2 4}

Lawyers in Brussels insist that the key difference from direct confiscation is that the Russian state remains the formal owner of the assets - they are not "transferred" to Ukraine and are not sold to third parties.^{2 4} In fact, this is a loan tied to the aggressor's expected payments, that is, a form of the same responsibility of the Russian Federation, only with a time delay and tons of legal caveats designed to prevent Russian lawyers from running wild in international courts.

Where is the Russian money: Euroclear and company

Most of the frozen Russian assets in Europe are held in the Belgian depository Euroclear - according to EU estimates, about 180–190 billion euros of reserves of the Central Bank of the Russian Federation and related structures are held there.^{1 2} Another approximately 20–30 billion euros are held in accounts in commercial banks in France, Germany, and other member states, where funds of Russian state-owned companies and sovereign funds are frozen.^{2 6}

Since the start of the full-scale invasion, Euroclear itself has already earned billions of euros from placing this frozen money: in just one year, profits from transactions with it reached over 3–4 billion euros, and part of this income is already being directed to aid programs for Ukraine agreed at the G7 level.^{1 8} The new scheme actually turns these assets into a "large collateral": if previously Kyiv received only interest, now they propose to deploy an entire credit pipeline for them.

How exactly does the EU want to raise 90 billion for Ukraine?

According to AP and European media, the "reparation loan" is intended as part of a broader package of long-term support for Ukraine in the amount of 90 billion euros for 2026-2027, which should complement the already existing four-year Ukraine Facility program of 50 billion euros for macrofinance and recovery.^{1 3 9} The priorities are simple and not very romantic: this money must be used to finance the Ukrainian budget (salaries, pensions, social benefits), the army (ammunition, air defense, modernization of the defense industry), and basic infrastructure, which after another Russian missile season requires not only patching, but also reconstruction.^{2 9}

The IMF estimates Ukraine's total external financing needs for the next two years at around €136 billion, so the EU "reparation loan" covers approximately two-thirds of this amount.^{2 3} The rest must be found by the US, the UK, Canada, Japan and international financial institutions – and while Washington is busy with its own political "swings", the Europeans have to invent increasingly complex financial structures so as not to find themselves, along with Ukraine, in front of an empty coffers.

Who is against: Belgium is afraid of the courts, France is afraid of its banks

As is often the case in the EU, the most interesting part begins when it comes to specific addresses. Belgium, where Euroclear is registered, is very reluctant to become the main target of Russian lawsuits in national and international courts.^{1 5} Belgian politicians have already warned their partners: if the EU launches a "reparation loan" for assets held in Brussels, the legal risks should be spread across all 27 countries, not just the one where Europe's largest depository "coincidentally" is located.^{5 10}

France traditionally supports the very idea of ​​forcing Russia to pay, but is not thrilled about the prospect of touching 18 billion euros of Russian assets frozen in French private banks.⁶ Paris would prefer that the main blow be borne by supranational structures and those states that already earn income from Russian assets, and that the French banking system, which already lives under the microscope of regulators and rating agencies, not become a new front in the legal war with the Kremlin.

USA: "Don't rush to give away what you can sell to Moscow tomorrow"

For its part, Washington is adding another ingredient to the mix: strategic skepticism. According to Bloomberg and European sources, the Trump administration is quietly insisting that the EU not tie up frozen Russian assets in huge long-term loans that would be difficult to undo in the event of a political deal with Moscow.^{3 8} The idea is simple: the assets of the Central Bank of the Russian Federation are the West's main trump card in future negotiations, and if it is "forced" into debt in advance, the bargaining maneuver narrows sharply.

For Ukraine, this logic sounds, to put it mildly, not very inspiring: we are actually being asked to wait with using Russian money so that it remains a bargaining chip in a potential "peace package", where someone will really want to sell Kyiv the "lesser evil" under the guise of great diplomacy.^{3 11} So far, the US supports the use of profits from frozen assets (interest), but is much more reserved about the idea of ​​working with their "body" in the format of guarantees or pledges.

Russia, as always, threatens "response"

Official Moscow predictably calls any manipulation of frozen assets "theft" and a "violation of international law," threatening "symmetrical measures" against Western investments in the Russian Federation.^{2 7} Russian diplomats are already hinting that the use of assets to finance Ukraine could be grounds for a "review" of the status of Western companies and property that have not yet been formally nationalized, but are only "temporarily managed" by Russian structures.

Lawyers in the EU, however, draw attention: in international practice, there are precedents of using the assets of an aggressor or a state that violates the law to compensate for the damage caused, especially when it comes to massive violations of international law and refusal to comply with court decisions.^{4 9} In fact, the entire logic of the "reparations loan" is built on the fact that the Russian Federation does not voluntarily acknowledge its responsibility, so the West is being exposed to the possibility of confiscating these assets as part of future legal processes.

Ukraine: support with a cautious “but”

The Ukrainian government openly supports all initiatives to use Russian assets for the benefit of Ukraine – both income and potentially the principal amount – and at the same time insists that the real goal should be confiscation, not the eternal "twisting of loans secured by someone else's property."^{10 12} Finance Minister Serhiy Marchenko has repeatedly emphasized at meetings of the G7 financial track: Ukraine is grateful for any mechanisms that convert Russian money into real support, but in the long term, it is Russia that should pay the bills - not European or American taxpayers.¹⁰

At the same time, Ukrainian experts warn: if the structure of the "reparation loan" is too fragile legally or politically, it will be overwhelmed by the first major lawsuits, and then not only the EU will be under attack, but also the reputation of the very idea of ​​compensation at the expense of the aggressor.^{7 9} Therefore, Kyiv is closely monitoring not only the amounts, but also how exactly the guarantees of liability between states, EU institutions, and private players like Euroclear are prescribed.

Will this be enough to keep Ukraine afloat?

Even if the "reparations loan" plan is approved in its most ambitious version, it will only cover part of the problem. The IMF reminds us that war with Russia remains the main risk factor for Ukrainian finances, and any projected figures for financing needs could "go away" after a new Russian offensive or a massive attack on the energy system.^{2 3} In such conditions, long-term loans for frozen assets are an important, but not the only tool: Ukraine still needs grants, military assistance, and political security guarantees.

In other words, the "reparation loan" is more of a test for the EU itself than a financial panacea for Ukraine. If the European Union can launch a mechanism for tens of billions of euros in an organized manner, without hysterics and endless vetoes, under the aggressor's obligations, it will mean that it is truly ready to play the long game against Russia.^{1 11} If everything once again falls apart due to fear of the courts and internal squabbles, the Kremlin will draw a simple conclusion: time continues to work against them, and the West continues to fear its own money more than Russian missiles.

Sources

1. AP News: "EU leaders weigh using frozen Russian assets to help Ukraine through 'reparations loan'"
2. Al Jazeera: "EU proposes using Russian assets, loans to fund $105bn package to Ukraine"
3. The Guardian: "European Commission plans 'reparations loan' to Ukraine using frozen Russian assets"
4. European Commission / debate: documents and discussions on the use of profits from Russian assets
5. BBC News: "Belgium urges Europe to drop plan for frozen Russian assets loan"
6. Babel / RBC-Ukraine: materials on the position of France ("France supports reparations loan to Ukraine, but not from assets in French commercial banks")
7. CNBC, Euroclear: Market Risk Analysis and Warning of Possible Russian Lawsuits
8. United24 / G7 statements: "G7 endorses plan to channel frozen Russian funds to Ukraine amid EU disputes"
9. European Parliament debate: "Frozen Russian assets" (12.03.2025)
10. Ministry of Finance of Ukraine: Statements by Serhiy Marchenko on the need for mechanisms for using Russian assets
11. Euronews: "Doubts grow over reparations loan for Ukraine as final deadline nears"
12. TVP World: "Seven EU leaders push for reparations loan to aid Ukraine"