By tapping Russian assets frozen in the bloc, its members aim to boost their own defense industry while arming Kiev
The EU wants to retain proceeds from frozen Russian assets by introducing a “Buy European” boost for its own defense industry as it arms Ukraine, and is moving to lock in strict procurement rules for a potential loan for Kiev, Bloomberg has reported.
EU members have long debated tapping Russian central bank funds frozen in the West as part of a “reparations loan” to Kiev. The bloc’s leaders hope to clinch the plan at a summit this week. Moscow has condemned any use of its immobilized funds as “theft.”
The draft would steer up to €210 billion ($246 billion) over the next five years to defense suppliers based in the EU and Ukraine, with a limited carve-out for non-EU members such as Norway. Brussels is reportedly seeking to ensure that any boost to Ukraine’s military capacity directly supports the bloc’s own defense industry, the outlet said on Wednesday, citing a proposal circulated to member states this week.
Participation by non-EU countries would be tightly capped and regulated, a condition that would sharply limit Kiev’s ability to use the loan to buy US-made weapons, the outlet said, citing the proposal.
Earlier this year, US President Donald Trump rolled out a new Ukraine arms-supply scheme under which Washington sells weapons sought by Kiev to NATO members, who then deliver them to the country.
In November, Trump said the US was no longer “spending” money on Ukraine and was instead taking in funds through weapons sales to NATO countries.
The reported proposal would also give the European Commission the power to require European defense manufacturers to prioritize orders for Ukraine and to impose penalties for non-compliance.
Last week, the EU member states voted on the latest temporary freeze on Russian sovereign funds. The bloc’s leadership had to invoke emergency powers to overcome the opposition of member states, including Hungary and Slovakia.
The initiative has faced mounting resistance from several member states, who argue the move risks undermining the bloc’s legal foundations, damaging confidence in the Eurozone and exposing European institutions to costly lawsuits.
Russia has steadfastly opposed EU moves to “steal” the funds, warning of economic and legal consequences.
Last week, the Bank of Russia filed a lawsuit seeking $230 billion in compensation from Euroclear. The first hearing has been scheduled for January 16.
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