What's happened
As of October 8, 2025, the EU is advancing a plan to use approximately €140 billion from frozen Russian assets to fund a loan for Ukraine’s war effort. The loan would be repaid only if Russia pays war reparations. The proposal faces legal and political challenges within the EU and strong opposition from Russia, which calls it theft.
What's behind the headline?
EU’s Strategic Financial Maneuver
The EU’s proposal to use frozen Russian assets as collateral for a €140 billion loan to Ukraine represents a bold step in circumventing U.S. aid reductions and asserting European autonomy in the conflict. This approach cleverly avoids outright confiscation, framing the funds as loan guarantees repayable upon Russia’s payment of reparations, thus attempting to navigate complex legal and diplomatic hurdles.
Legal and Political Hurdles
Despite broad support from several EU leaders, including those from Finland, Sweden, and Denmark, the plan faces resistance from countries like Hungary and Belgium, concerned about legal risks and potential Russian retaliation. The European Central Bank warns that seizing assets could undermine the euro’s credibility, while Russia vehemently condemns the move as theft.
Implications for EU-Russia Relations
The plan risks escalating tensions with Moscow, which has already blocked asset sales and divestments by Western banks like Austria’s Raiffeisen Bank International. However, it also signals the EU’s determination to financially empower Ukraine and pressure Russia, potentially accelerating negotiations or prolonging conflict depending on Moscow’s response.
Forecast and Impact
If implemented, the loan will secure Ukraine’s military funding for years, reducing reliance on unpredictable external aid. However, internal EU divisions and legal complexities may delay or dilute the plan. The move underscores a shifting geopolitical landscape where Europe seeks greater strategic independence, but also faces the challenge of balancing solidarity with legal and economic prudence.
What the papers say
Lorne Cook of The Independent details the EU’s plan to back a €140 billion loan for Ukraine using frozen Russian assets, highlighting the legal and political complexities involved. He quotes Commission President Ursula von der Leyen emphasizing that the assets are not confiscated but used as loan collateral, repayable if Russia pays reparations. The Kremlin’s spokesman Dmitry Peskov calls the plan “theft,” warning of legal consequences and damage to European financial credibility.
Al Jazeera’s Lorraine Mallinder reports on Zelenskyy’s appeal for EU support amid the plan’s discussion at the Copenhagen summit, noting Hungary’s opposition and the broader geopolitical tensions. The Moscow Times provides insight into Russia’s blocking of asset sales and the challenges faced by Western banks like Raiffeisen in exiting the Russian market, illustrating the economic entanglements complicating sanctions enforcement.
Politico adds that Germany is open to “new, legally sound” proposals to use frozen Russian funds, reflecting a pragmatic approach within the EU. Together, these sources paint a picture of a complex, evolving strategy by the EU to support Ukraine financially while navigating internal divisions and external opposition.
How we got here
Following Russia’s 2022 invasion of Ukraine, the EU froze billions in Russian assets. With U.S. aid to Ukraine reduced under President Trump, the EU seeks to independently support Kyiv by leveraging these frozen funds. The plan involves issuing a ‘reparation loan’ backed by these assets, aiming to sustain Ukraine’s defense budget through 2026-2027.
Go deeper
- How will the EU's reparation loan for Ukraine work legally?
- What are Russia's main objections to the EU's plan?
- Which EU countries support or oppose using frozen Russian assets for Ukraine?
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