The European Union is developing a mechanism to finance Europe’s defense industry by using frozen Russian assets as collateral for providing reparations loans to Ukraine. This was stated by the President of the European Commission, Ursula von der Leyen, during a speech in Brussels.
This is reported by Kyiv24
Using frozen Russian assets for defense
According to the initiative, part of the loan provided to Ukraine will be directed towards purchasing defense products from EU countries, which will simultaneously support European industry and enhance defense capabilities. Von der Leyen emphasized the need for a structural approach to military support:
“We need a more structural solution for military support. And that is why I proposed the idea of a reparations loan based on frozen Russian assets. We will strengthen our own defense industry by ensuring that part of the loan is used for purchases in Europe and with Europe,” said the President of the European Commission.
Loan conditions and funding sources
The new loan for Ukraine, which is still in the proposal stage, relies not on profits from Russian assets but on the assets themselves. In Europe, there are approximately 200 billion euros in frozen Russian assets. According to European Commission spokesperson Balazs Ujvari, about 176 billion euros of these assets are held in the Euroclear clearing house in Brussels. Most of them—approximately 210 billion euros—are in the Belgian central securities depository Euroclear, with 175 billion already converted into cash and potentially serving as the basis for the new loan.
Von der Leyen emphasized that the proposed mechanism does not involve the confiscation of Russian funds. Ukraine will have to repay the loaned funds if Russia pays reparations. She stressed that the perpetrator of aggression must bear financial responsibility.
The loan amount could reach up to 140 billion euros, which the European Commission plans to provide in separate tranches according to specified conditions for Ukraine. A final decision on the loan is expected to be made after discussions at the informal EU leaders’ summit in Brussels on October 1. Over the next month, the European Commission is to prepare a concrete proposal, which will then be reviewed and approved by the European Council.