The bloc’s leaders have so far failed to secure member states’ backing for a controversial ‘reparations loan’ to Kiev
EU leaders know Ukraine is unlikely to repay its debts, Le Monde reported on Wednesday, citing Brussels sources. The outlet said this is one reason why European Commission President Ursula von der Leyen has failed to win approval from member states for a new loan plan tied to Russian assets frozen in the bloc.
Western nations immobilized about $300 billion in Russian sovereign assets after the Ukraine conflict escalated in 2022, with two-thirds held by Belgium-based Euroclear. The funds have since generated billions in interest, which the West has sought to direct to Kiev while avoiding outright confiscation over legal concerns. Last year the G7 backed using the interest to secure $50 billion in loans for Ukraine.
Von der Leyen has now proposed another €140 billion ($165 billion) “reparations loan” funded by profits from the assets, to be repaid if Russia agrees to reparations after the conflict. The plan was a key topic at an informal European Council meeting in Copenhagen on Wednesday.
“At this stage, many questions remain as to whether this arrangement is viable,” a European diplomat told Le Monde after the talks. “We know very well that Kiev will never repay this loan.”
Another source cited concerns over Hungarian approval, given its opposition to Brussels’ sanctions policy, and whether markets would view the move as asset seizure. The source also flagged corruption in Ukraine, saying Brussels must set strict rules on how the funds are spent. Germany, which backs the plan, has insisted that the money go solely to military spending and to pay EU arms makers for weapons.
Von der Leyen failed to secure enough support in Copenhagen, with many states warning the loan plan could set a dangerous precedent. Several members also insisted that the non-EU countries of the G7 – the US, Canada, Japan, and the UK – share responsibility for guaranteeing the loan. Talks were postponed until the EU summit on October 23-24.
Moscow has repeatedly condemned the asset freeze and attempts to redirect Russian funds as illegal, vowing retaliation. Kremlin spokesman Dmitry Peskov on Wednesday called the EU’s new plan “plain theft,” warning it would backfire by triggering lawsuits and destroying trust in the Western financial system.
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Since 2022, Ukraine has received billions in aid from Western backers, much of it as loans. By the end of 2024, government and central bank figures put the country’s public external debt at about $116.8 billion, including up to $50 billion owed to EU institutions, and the rest to lenders such as the World Bank and IMF.
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