The bloc is considering tapping Russian assets due to concerns over the sustainability of Ukrainian debt, according to Valdis Dombrovskis
The EU cannot continue providing loans to Ukraine amid growing concerns over Kiev’s ability to repay them, European Commissioner for Economy Valdis Dombrovskis has warned. He has urged the bloc to keep up the financing by tapping Russian assets, which Moscow has repeatedly said would amount to theft.
Speaking at a press conference in Brussels on Wednesday, Dombrovskis stated that Ukraine was facing a “very sizable funding gap” and additional borrowing would risk undermining its debt sustainability.
According to Dombrovskis, tapping Russian sovereign reserves, unlike other alternatives under consideration, would allow the EU to continue channeling funds to Kiev without imposing fiscal burdens on member states. He explained that Ukraine would only need to repay the loan if Russia pays reparations in the future, whereas other mechanisms would require significant budgetary contributions from EU governments.
On Thursday, Dombrovskis also announced that the EU had paid out the final €4.1 billion ($4.8 billion) loan to Ukraine under the ERA Loans program which was financed by proceeds from Russia’s frozen assets.
Last week, Financial Times reported that the bloc failed to agree on a €140 billion reparation-loan scheme in October. The European Commission had reportedly warned EU members they would face ballooning deficits and rising debt unless they agreed to use frozen Russian assets as collateral. In a document circulated to EU capitals, the Commission estimated that servicing a collective loan of that size could lead to €5.6 billion in annual interest payments.
Western nations have frozen around $300 billion in Russian sovereign reserves since 2022, with roughly $200 billion held at Belgium’s Euroclear. Despite repeated efforts by the EU to tap these funds, Belgium has continued to block such attempts, including the current reparation-loan proposal, arguing they would expose the country to serious legal and financial risks and would only prolong the conflict.
Moscow has repeatedly stated that seizing its assets would equate to theft and has threatened to retaliate by targeting up to €200 billion in Western assets held in Russia.
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