The European Commission will move ahead with controversial plans to fund Ukraine with a loan based on Russia’s frozen assets, but in a concession to concerns raised by Belgium, which hosts most of the assets, the EU executive has also proposed another option: an EU loan based on common borrowing.
The European Commission president, Ursula von der Leyen, said on Wednesday the two proposals would ensure “Ukraine has the means to defend [itself] and take forward peace negotiations from a position of strength”.
The latest round of US-Russia talks aimed at ending the conflict have appeared to make little progress. A Kremlin official said on Wednesday, a day after talks between Vladimir Putin and Donald Trump’s envoys, Steve Witkoff and Jared Kushner, that the discussions had been “positive” but there was little sign that Putin was ready for compromise on his maximalist goals.
Ukraine’s foreign minister, Andrii Sybiha, urged Putin to “stop wasting the world’s time”. His Estonian counterpart, Margus Tsahkna, said it was “pretty obvious” that the Kremlin was not interested in peace. “What we see is that Putin has not changed any course. He’s pushing more aggressively on the battlefield,” he said.
European leaders, having been left on the sidelines of the White House effort to push through a peace deal, have instead been focusing on the need to plug the gap in Ukraine’s finances as the war grinds into a fourth winter.
Von der Leyen outlined a €90bn plan which she estimated would cover two-thirds of Kyiv’s funding needs for the next two years. She said other “international partners” would cover the rest.
The aid would be funded by common EU borrowing or a loan based on Russia’s frozen assets in Europe. EU officials say these the two options could be combined, but have always made clear the frozen assets loan is their preferred choice – despite stiff opposition from Belgium, which hosts most of Russia’s immobilised wealth.
The publication on Wednesday of a long-awaited legal text of the reparations loan will be followed by an EU summit this month at which EU leaders are being urged to agree a two-year funding plan for Ukraine to avert a looming cash crunch.
Leaders failed in October to agree on a proposed “reparations loan” to Ukraine using the Russian assets, but the question is becoming increasingly urgent, with Kyiv forecast to run out of money from next spring. EU officials estimate Ukraine needs €136bn (£119bn) in 2026 and 2027 to continue its defence and keep the country running.
The stakes became even higher after the Trump administration floated a plan to invest some of Russia’s frozen assets in joint US-Russia projects, as well as taking profits from $100bn (£75bn) of the funds that it had earmarked to reconstruct Ukraine. European leaders strongly pushed back against these ideas, which were part of a 28-point plan for Ukraine that has since been amended.
About €290bn of Russia’s sovereign wealth in the west was frozen after the full-scale invasion of Ukraine in 2022. Most of those funds are held in Europe, above all in Belgium. Euroclear, a central securities depository in Brussels, holds €183bn of the Russian assets and fears that any use of the assets could be tantamount to confiscation, therefore violating international law and triggering a slew of legal cases.
EU officials have always downplayed legal risks, arguing that Russia would maintain ownership of the funds. They propose an EU loan for Ukraine secured on the Russian assets. The plan hinges on the assumption Moscow will one day pay reparations to Kyiv and that Russia’s assets will remain frozen for the foreseeable future.
Von der Leyen said on Wednesday the reparations loan would have “strong safeguards for our member states”, a response to the Belgian prime minister, Bart De Wever, who has said Belgium could face a multibillion-euro bill if Euroclear was sued by Russian individuals and companies.
The commission president rejected his argument that using the frozen assets would be an obstacle to any peace deal. De Wever has said the reparations loan plan is “fundamentally wrong” and would be an obstacle to any peace deal, because the frozen assets could then not be used for the reconstruction of Ukraine.
Von der Leyen said: “We are increasing the cost of Russia’s war of aggression and this should act as a further incentive for Russia to engage at the negotiating table.”
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Belgium’s foreign minister, Maxime Prévot, said his government continued to see the reparations loan as “the worst of all” options. Arriving at a Nato ministerial meeting in Brussels, he said: “The text the commission will table today does not address our concerns in a satisfactory manner. It is not acceptable to use the money and leave us alone facing the risks.”
He also said Belgium had been frustrated with “not being heard” and having its concerns “downplayed”.
In theory, Belgium could be outvoted on the frozen assets plan, which is strongly supported by Germany and Nordic and central and eastern European member states. In reality, EU countries would be extremely reluctant to isolate Brussels, although the Belgian government will face pressure to agree.
Von der Leyen said the EU had “taken almost all” of Belgium’s concerns into account. The proposal, she insisted, contains “very strong safeguards in place to protect member states and to reduce the risks as much as possible”.
These safeguards include guarantees from other member states and the EU in the event Belgium had to repay any money, as well as protection against “unlawful expropriations outside Russia”, a reference to legal challenges in countries that are friendly to Moscow.
The EU will also upgrade the law underpinning the asset freezing to ensure they cannot be accidentally “defrosted” by a veto from an EU member state. Currently EU sanctions must be renewed every six months by unanimity, including Hungary’s Kremlin-friendly government.
Belgium will have welcomed the commission’s proposal of Brussels’s preferred option of an EU loan for Ukraine using unallocated funds in the EU budget as collateral. Belgium has said this is the least risky way to fund Ukraine, but many EU governments are reluctant to venture into more common borrowing.
The EU foreign policy chief, Kaja Kallas, a strong advocate of the frozen assets plan, said this week that “raising capital together is also out of the question for some member states”. She said she was not seeking to “diminish the risks or the worries the Belgian government has”, but argued that a loan based on Russian assets was the best option and would “definitely strengthen European position vis a vis Moscow”.
Additional reporting by Jakub Krupa
