The European Commission has privately proposed that EU member states use frozen Russian Central Bank assets to fund a new €140 billion loan to Ukraine, Politico reported on Friday, citing an internal memo.
The memo, circulated ahead of a meeting of EU ambassadors on Friday, details a plan to use some of the €185 billion of Russian cash held by Brussels-based financial firm Euroclear to issue a loan to Ukraine to support its “defence cooperation” and budget needs.
The proposal entails the EU entering into a “tailored debt contract with Euroclear at 0 percent interest,” and redirecting €140 billion of Russian cash to Ukraine in tranches, the note reads.
According to Bloomberg, which also reported seeing the internal memo, Kyiv would only have to pay back the loan, which the EU would then pay to Euroclear, if Moscow agreed to fund Ukraine’s future reconstruction, or if the EU’s Russian sanctions were lifted.
The proposal, which could be made public next week, when European leaders gather for a leaders’ summit in Copenhagen, theoretically allows Brussels to offer Kyiv substantial financial support without either seizing Russian assets outright or adding to Ukraine’s existing debt.
The long-discussed idea of redirecting frozen Russian assets to support Ukraine has taken on renewed prominence since European Commission President Ursula von der Leyen proposed a “reparations loan” to aid Ukraine during her State of the European Union speech on 10 September.
On Thursday, German Chancellor Friedrich Merz, long sceptical of any plan involving the confiscation of Russian assets, expressed his support for a new loan proposal as a way of sending an “unmistakable signal of resilience to Moscow” while protecting its property rights.
“In recent years, we have often played it by ear. Now I am advocating the mobilisation of financial resources on a scale that will secure Ukraine’s military resilience for several years,” Merz wrote in a Financial Times op-ed.
Last week, the UK announced that it was considering its own “reparations loan” that would entail using the £25 billion (€28.6 billion) in Russian assets held in the UK to “work in lockstep” with a similar European proposal to help Ukraine.
Since Russia’s full-scale invasion of Ukraine, the EU and UK have provided loans to Ukraine using the interest generated by frozen Russian central bank assets, while leaving the original assets largely untouched.