Back in October, EU leaders gathered in Brussels to discuss the issue of further financial support for Ukraine. At this summit, EU heads of state and government were debating the legal risks of using frozen Russian Central Bank assets as collateral for a massive loan to aid Ukraine. After the summit, all EU leaders except Hungary approved a statement committing to ’addressing Ukraine’s pressing financial needs’ for the next two years and asking the bloc’s executive to draw up options for financial support.
In early December, the European Commission unveiled two decisions aimed at meeting Ukraine’s financial needs for 2026-2027. According to Commission President Ursula von der Leyen, the European Commission is considering funding Ukraine over the next two years through external borrowing guaranteed by the EU budget or through so-called reparations loans from frozen Russian assets. The decision must be adopted unanimously.
The proposed reparations loan earmarks €115 billion to finance Ukraine’s defense industry over five years, while €50 billion would go to cover Kyiv’s budgetary needs.
’Here, we would use the cash balances from demobilised Russian assets in the European Union. (…) In other words, we’re taking the cash balances, we’re providing them to Ukraine as a loan, and Ukraine has to pay back this loan if and when Russia is paying reparations.’, von der Leyen explained how the idea of reparations loans should work.
It also should be mentioned that as an alternative to a loan backed by frozen Russian assets, the European Commission proposed issuing Eurobonds to finance Ukraine.
The European Commission wants the 27 EU member countries to agree at a summit in Brussels on 18 December to support Ukrainian economy with a loan based on immobilized Russian Central Bank reserves, according to POLITICO.
Given Ukraine’s heavy military spending due to the war, securing financial support is essential. All available mechanisms including the use of frozen Russian assets, financial grants, and international assistance programmes are crucial to maintaining the country’s ability to defend itself. Ukraine’s budget and military needs for 2026 and 2027 are estimated to total around $153 billion.
Here are some national stances that indicate a rift not only within the EU, but also in the entire international community on the issue of transferring frozen Russian assets to Ukraine.
Belgium called the new proposal ’absolutely unacceptable’. Belgium’s stance is important because the biggest tranche of frozen assets – some $225 billion worth – are held in the country, and the Belgian government has been reluctant to take any risks on using these funds without firm guarantees from its European partners. However, other EU countries opposed to granting Belgium unlimited guarantees to release the loan for Ukraine.
Slovak Prime Minister Robert Fico said under no circumstances he would support the European Commission’s proposal to provide Ukraine with a reparations loan funded from frozen Russian assets if the money is to be used for military purposes. Fico said the main reason for this stance is his policy of peace, which prevents him from ’voting in favour of prolonging military conflict, because providing tens of billions of euros for military spending is prolonging the war’. He also stated that the EU’s strategy towards the conflict is wrong and ineffective, and the ’continuation of the war is nothing but senseless killing without strengthening Ukraine’s position in possible peace negotiations.’
Hungary firmly rejected the idea of issuing joint bonds secured by the EU’s seven-year budget to provide funds for Ukraine. POLITICO says that this ’robs the EU of a potential Plan B should it fail to find a way to use frozen Russian state assets to finance a €165 billion loan to Kyiv’.
In addition, EU should stop sending money to Ukraine after corruption reports, Hungary said referring to the large-scale corruption case at Ukraine’s nuclear energy company ’Energoatom’, involving the theft of $100 million from the state nuclear agency. On 28 November, Ukrainian President Volodymyr Zelenskyy dismissed Andriy Yermak from his post as Head of the President’s Office.
Background: On November 10, the National Anti-Corruption Bureau of Ukraine announced the uncovering of a large-scale corruption scheme at Energoatom. It involved the former business partner of Ukrainian President Volodymyr Zelenskyy, Tymur Mindich, two ministers, as well as several other officials. Head of the Office of the President of Ukraine Andriy Yermak submitted his resignation, after his office and home was searched by the anti-corruption agencies.
The UK government is ready to transfer £8 billion (over US$10.6 billion) in frozen Russian assets to support Ukraine.
Japan – where approximately US$30 billion in frozen Russian assets are held – rejected the EU’s proposal to join its plan to use frozen Russian assets for the benefit of Ukraine. According to POLITICO, experts believe that this move dashed the EU’s hopes of gaining global support for the initiative adding that Japan’s position may be linked to US opposition to using
Regarding the issue of funding Ukraine, another important initiative should be mentioned. According to reports by Bloomberg, the United States lobbied several EU nations to block plans to tap frozen Russian central bank assets to finance a substantial loan to Ukraine. Washington considers using the frozen Russian assets in its plans to enable peace talks with Moscow, suggesting they could help finance US-led post-war investments. US Urged Europeans to Oppose EU’s Loan Plan to Help Ukraine – Bloomberg
German Chancellor Friedrich Merz opposed the idea of transferring Russian assets immobilised in the EU to the US – an idea that was said to have been discussed during peace talks advanced by US President Donald Trump. Merz said that Ukraine needs help to get through the winter and will probably require financial support for the next two to three years. ’We need funds for that. This is an intra-European issue and I see no economic possibility of transferring the funds we have mobilised to the United States.’, the German Chancellor said.
Despite disagreements both inside the bloc and globally, European Commission President Ursula von der Leyen continues to support the idea of using the Russian assets to support Ukraine.
It should be stressed that the large-scale corruption scandal broke out at a very unfavorable time for Ukraine given that EU countries are debating on the issue of unblocking a €140 billion reparations loan for Ukraine from frozen Russian assets. Furthermore, as has already become clear, Moscow refuses to agree to the EU transferring frozen Russian assets to Ukraine. Disagreements over the use of Russian assets are not only deepening the rift between Member States, but also mean that the EU’s top leaders and the leaders of those European countries who promised that peaceful citizens will not have to pay the price of supporting Ukraine are likely to face a serious crisis of confidence soon.
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