With Putin's money! Ukraine will receive reparations from Russia in the form of an EU loan

European Union ambassadors will begin discussing a plan to provide 140 billion euros in loans to Ukraine from frozen assets of the Central Bank of Russia on September 26, Bloomberg writes, quoted by Focus.

According to the draft document, the funds will come from approximately 180 billion euros held in Euroclear accounts.

The money will be gradually transferred to the EU, which will allow it to lend to Kiev. At the same time, the EU will conclude a zero-interest debt agreement with Euroclear so that it can meet any future obligations to Russia.

Return conditions

Ukraine will be obliged to return the EU funds only if Moscow agrees to finance the country's reconstruction and payment of reparations, or if sanctions against Russia are lifted.

In theory, this means that the aid will not increase Ukraine's national debt and will not be considered a direct seizure of Russian assets.

The EU has repeatedly stressed that the assets will remain frozen until Russia compensates Ukraine for losses from the war. The operation will be guaranteed by the union's member states.

Support from allies

The discussions are taking place against the backdrop of growing support from Kiev's allies for the idea of using frozen Russian assets. German Chancellor Friedrich Merz expressed full support for the plan the day before.

The G7 countries are also discussing a common approach to using assets to increase pressure on Russia. They are also considering sanctions on the energy sector and networks of third countries that help Moscow trade oil.

Previous initiatives

The EU previously agreed to provide Ukraine with €45 billion in loans as part of a G7 initiative based on profits from Russian assets. Those loans will remain in place, and the new plan includes an additional €140 billion.

The decision must be approved at the EU summit in Copenhagen next week. Belgium, where the assets are concentrated, is opposed, however.

Belgian opposition

“Taking Putin's money and leaving the risks to us will not happen,” said Belgian Prime Minister Bart De Wever.

However, the EU proposal does not envisage direct confiscation of assets. A qualified majority of member states may be enough to launch the scheme, in this case a unanimous decision is not required, as is the case with sanctions.

The bloc expects to launch the mechanism by the end of the year and start disbursing funds to Ukraine as early as 2026.

Ukraine's budget deficit

The Financial Times reported earlier that the European Union is preparing a reparations loan scheme for Ukraine worth 170 billion euros.

The Cabinet of Ministers of Ukraine predicts that the state budget deficit in 2026 will be financed by international aid of $44 billion. The sources for $18 billion of this aid have not yet been determined.

According to Sergiy Nikolaychuk, First Deputy Chairman of the National Bank of Ukraine, in 2026 the most likely source will be "funds from European partners".