The European Commission is seeking approval from member states to launch a 140 billion euro reparations loan for Ukraine. This plan was designed to utilize immobilized Russian sovereign assets held within the European Union. The proposal, introduced on 25 October 2025, remains blocked due to deep legal, financial, and political divisions among EU members.
European Union Faces Gridlock Over 140 Billion Euro Reparations Loan for Ukraine
A plan to redirect profits from frozen Russian funds toward the recovery of Ukraine exposes deep legal uncertainties, political hesitations, and fears of international retaliation. The situation underscores how the EU struggles to balance ethics, economics, and enforcement.
Note that the plan specifically seeks to redirect interest income from approximately 210 billion euros in Russian central bank assets frozen since 2022. Most of these are held by the Euroclear clearinghouse in Brussels. These assets have generated an estimated 2.5 billion to 3 billion euros annually and primarily benefit Belgium through windfall tax revenues.
The European Commission intends to transform mature Euroclear holdings, currently valued at about 175 billion euros, into liquidity for a reparations loan. Moreover, under the proposal, 140 billion euros would be transferred to Ukraine to sustain economic operations in 2026 and 2027, while 45 billion euros would remain allocated to an existing G7 credit line.
However, Belgium has emerged as the main obstacle to implementation. Prime Minister Bart De Wever warned that transferring or liquidating Russian funds could violate its investment treaty with Russia and risk arbitration or potential countermeasures. Belgium insists on full risk-sharing across EU member states and strong legal guarantees before any transfer occurs.
The financial caution stems from its exposure as host to Euroclear, which manages the largest share of immobilized Russian reserves globally. The Belgian government has already imposed taxes on profits from these assets, generating significant revenue, but fears that moving principal funds might invite lawsuits or jeopardize the operational security of Euroclear.
The European Central Bank has also voiced reservations. President Christine Lagarde stated that direct seizure of sovereign assets could undermine international law and erode global confidence in the legal integrity of the Eurozone. She emphasized that any step resembling confiscation must be coordinated and discussed with G7 allies to avoid diplomatic repercussions.
European Union leaders discussed the issue during the October 2025 Brussels Summit but failed to agree on the operational framework. They endorsed the principle of supporting Ukraine through Russian assets but left technical details unresolved. The Commission was instructed to refine its proposal for possible adoption during the December summit.
Ukrainian President Volodymyr Zelenskyy addressed EU leaders, stressing that Ukraine requires immediate financial guarantees to maintain stability in 2026. He urged European partners to finalize the reparations loan promptly because delayed assistance would weaken the Ukrainian defense capacity and reconstruction efforts amid continued Russian aggression.
Despite broad political consensus on aiding Ukraine, the debate highlights contrasting positions and legal interpretations within the European Union. Some governments favor rapid disbursement on moral and geopolitical grounds. Others, including Belgium and Germany, warn that mishandling frozen assets could trigger financial instability or litigation.
The European Commission is committed to continue its bilateral negotiations with member states and coordinate with G7 partners to design a rationale workaround and a legally resilient mechanism for transferring proceeds. Officials expect a revised draft before year-end. They are aiming to mobilize funds for Ukraine by early 2026 if unanimous approval is achieved.