The European Union is preparing to discuss two key mechanisms for increasing financial assistance to Ukraine. Among the options being considered by the finance ministers of EU member states are providing loans or using frozen assets of the Russian Federation. The latter method is considered more likely.
This is reported by Kyiv24
Details of the Negotiations in Brussels
The meeting of EU finance ministers will take place after the leaders of the bloc’s countries promised at the end of October to finance Ukraine’s needs in 2026-2027. The European Commission has been tasked with preparing specific proposals regarding funding sources.
According to a senior EU official, the document with options is not yet finalized, but there are only two realistic possibilities to secure the 130-140 billion euros needed by Ukraine. The option of using frozen Russian assets is being discussed, as well as the possibility of borrowing funds on financial markets by EU countries with subsequent interest payments.
Reparations Loan and the Role of Euroclear
A significant portion of the frozen Russian assets is held in accounts at the Belgian securities depository Euroclear. Following the start of the full-scale invasion, most securities were converted into cash.
Last month, Russia stated that any such move would be illegal and threatened a “painful response.”
If a decision is made to use these assets, the EU plans to replace the Russian funds in Euroclear accounts with AAA-rated zero-coupon bonds issued by the European Commission. The cash obtained will be transferred to Ukraine. Repayment of this loan will only occur if Ukraine receives war reparations from the Russian Federation, effectively turning the loan into a grant and providing Ukraine access to funding until the end of the war. This approach is referred to as a “reparations loan,” as it is directly linked to future reparations from Russia.
After the EU summit in Brussels, European Commission President Ursula von der Leyen confirmed that the reparations loan based on frozen Russian assets is a priority funding option for Ukraine in the coming years.