European Commission weighs plan to tap frozen Russian assets to fund Ukraine: Reports

The European Commission is set to unveil a legal plan this week that would allow frozen Russian assets to be used to support Ukraine’s finances while still permitting the option of borrowing on financial markets or combining both approaches, four sources told Reuters.

EU leaders agreed in October to meet Ukraine’s pressing financial needs for the next two years but did not endorse using 140 billion euros ($162 billion) in frozen Russian sovereign assets as a loan for Kyiv. Belgium raised concerns over potential legal risks, as most immobilised Russian funds in Europe sit in accounts held by the Belgian securities depository Euroclear.

Plan links repayment to future Russian reparations

Under the emerging proposal, Ukraine would only be required to repay the loan if Russia later pays reparations for the damage caused by its war against its neighbour. The Commission is expected to adopt the plan on Wednesday, anchoring it to the cash balances of Russia’s immobilised central bank assets.

The draft would also preserve the option of a loan financed through EU borrowing on financial markets and allow flexibility to shift between the two mechanisms, the sources said.

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A Commission spokesperson declined to comment on the details of the proposal, stating only that commissioners would discuss financing options for Ukraine at their weekly meeting and are due to adopt the relevant legal texts.