President of the European Commission Ursula von der Leyen has unveiled a new financial plan aimed at meeting two-thirds of Ukraine’s funding needs for 2026–2027. As part of this initiative, it is planned to raise 90 billion euros through a combination of EU borrowings and a reparations loan, which will be financed by frozen sovereign assets of the Russian Federation.
This is reported by Kyiv24
Reparations Loan Mechanism and Coverage of Financial Institutions
According to the details presented by von der Leyen, the European Commission has prepared two key decisions and a package of five legislative proposals. An important part of this package is the proposal to use frozen Russian assets not only in Belgium but also in financial institutions in other countries. These institutions are expected to transfer cash balances to a special reparations loan instrument. Ukraine will receive these funds as a loan, which must be repaid if and when Russia pays reparations.
“We propose to cover all financial institutions that have accumulated such cash balances. And these institutions should transfer the cash into the reparations loan instrument. In other words, we take the cash balances, provide them to Ukraine as a loan, and Ukraine must repay this loan if and when Russia pays reparations. This decision can be made by a qualified majority vote,” said the President of the European Commission.
Safeguards and International Support
To protect member states and financial institutions from potential retaliatory measures by Russia, as well as from illegal expropriations in jurisdictions friendly to Moscow, the legislative package includes a number of safeguards. Belgium, where most of the frozen Russian assets are held, has paid particular attention to these risks. The Belgian Foreign Minister criticized the proposal shortly before von der Leyen’s presentation, after which, according to her, most of Belgium’s concerns were taken into account in the final version.
A robust solidarity mechanism is planned to be established, which will be backed by bilateral national guarantees or guarantees from the EU budget. It is also emphasized that the initiative fully complies with European and international law and contributes to maintaining the euro’s status as a global currency.
If an agreement on the seizure of Russian assets cannot be reached, an alternative option is being considered – providing Kyiv with a so-called “interim” loan, which would be financed through borrowings from the European Union.