EU proposes using frozen Russian assets or borrowing to give 90bn euros to Ukraine

BRUSSELS: The European Commission presented EU member states on Wednesday with two options to give Ukraine 90 billion euros ($105 billion) for the next two years - use Russian frozen assets or borrow money on international markets. The Commission, the European Union’s executive body, has made clear it favours a “reparations loan” using Russian state assets frozen in Europe due to Moscow’s war in Ukraine. But Belgium, which holds the bulk of the assets, has voiced a range of concerns that it said had not been satisfactorily addressed by the proposals.

“We are proposing to cover two-thirds of Ukraine’s financing needs for the next two years. That’s 90 billion euros. The remainder would be for international partners to cover,” Commission President Ursula von der Leyen told reporters.

“Since pressure is the only language the Kremlin responds to, we can also dial it up,” she said. “We have to increase the costs of war for (Russian President Vladimir) Putin’s aggression and today’s proposal gives us the means to do this.”

She said the proposal had taken into account almost all the concerns raised by Belgium, whose Brussels-based financial institution Euroclear is the main holder of the assets. The proposal would now also cover other financial institutions in the EU that hold such assets, von der Leyen said.

Russia has warned the EU and Belgium against using its assets, which it says would be an act of theft. The Commission says the scheme does not amount to confiscation as the money would be in the form of a loan - although Ukraine would only have to redeem it if Russia pays reparations.

The complexities around the scheme increased after a US-backed 28-point plan to end the war in Ukraine proposed that some of the assets be used in a joint American-Russian investment vehicle.

But von der Leyen said she had informed US Treasury Secretary Scott Bessent of her plan to move forward with the reparations loan and it had been “positively received”.

The Commission said the EU could proceed with the scheme if 15 out of 27 member countries, representing at least 65% of the EU population, voted in favour.

The other option - borrowing using the EU budget - would require unanimity among EU countries, a potentially difficult hurdle to clear as Hungary’s Russia-friendly government has opposed previous funding for Ukraine.