EU set to channel frozen Russian asset profits into Ukraine aid

The European Union (EU) is moving closer to approving the use of profits from frozen Russian assets to finance a large-scale loan for Ukraine — the so-called “reparations loan.”

EU ambassadors have already informally agreed on a draft of the European Council conclusions ahead of the upcoming meeting, POLITICO reports, citing diplomatic sources.

The document calls on the European Commission to present a proposal for a reparations loan to Ukraine, one that would be “based on proper European solidarity and risk-sharing.”

A Belgian diplomat told POLITICO that the draft text serves as a “political go-ahead” for the Commission, allowing it to publish a formal proposal after Thursday’s meeting.

Belgium has taken a cautious stance regarding the reparations loan, as Euroclear, the financial institution holding the frozen Russian assets, is headquartered in Brussels.

The country is concerned about potentially having to compensate for losses if Moscow’s legal claims are upheld.

However, the Belgian diplomat added that Belgium will not oppose the call for the Commission to advance a proposal for the loan.

Following Russia’s 2022 offensive against Ukraine, Western nations have immobilised approximately €210 billion of Russian sovereign assets in Europe, mainly held at Belgium’s securities depository Euroclear.

The European Commission has proposed a mechanism where these assets are not outright confiscated — which would be legally problematic — but are used as collateral to issue a large-scale “reparations loan” to Ukraine; the loan would only need to be repaid if and when Russia pays war reparations.

As part of the current discussions, the loan amount being considered is up to €130-€140 billion, with many EU member states and financial officials working through legal and fiscal risk issues, particularly because Belgium bears major exposure, and some states worry about Moscow’s legal claims.

By Jeyhun Aghazada