Europe plans to turn frozen Russian assets into a €140 billion loan for Ukraine

New European Commission Plan

The European Commission proposed the idea of directing Russia’s frozen assets towards a €140 billion loan for Ukraine. This plan was discussed among Western leaders ahead of the EU ambassadors’ meeting.

Discussions and Approaches

The presented documents note that an important meeting of European leaders will take place next week in Copenhagen. Ways to implement the mentioned idea will be considered there. In recent weeks, officials have largely unofficially touched on this topic, suggesting that Ukraine will be able to repay the loan only after the conflict ends and Russia pays post-war reparations.

The next step will be the return of funds to the company Euroclear from Belgium, responsible for controlling Russia’s frozen assets, as indicated in the documentation. The European Commission believes that the loan for Ukraine should be issued in tranches, allocating part of the funds for “defense cooperation” and support of Kyiv’s state budget.

Changes in Sanctions Procedure

In European institutions, a possible change in the procedure for renewing sanctions is being discussed. The idea is to move from the need for a unanimous decision to a qualified majority, which will reduce the risk of blocking decisions, especially from Hungary.

German Chancellor Friedrich Merz expressed support for turning Russian reparations into loans for Ukraine, noting that the funds should be spent only on military aid.

New Sanctions and Their Consequences

The European Union plans to impose a ban on the import of Russian liquefied natural gas in the new 19th package of sanctions, but this step will not be implemented before 2027.

Association Agreement with Israel

In Europe, the possibility of suspending certain provisions of the Association Agreement between the EU and Israel is also being discussed. Prime Minister of Israel Benjamin Netanyahu and Finance Minister Bezalel Smotrich may possibly fall under sanctions.