Brussels is proposing that the bulk of a potential 140-billion-euro ($163-billion) loan for Ukraine — funded by Russian frozen assets — be used to buy European weapons, according to a document seen by AFP Friday.
The European Commission, the EU’s executive, has floated a complex scheme aimed at further leveraging some 200 billion euros of Russian central bank assets immobilised in the bloc to aid Kyiv’s fight with Moscow.
EU leaders are set to discuss the plan at a summit next week and officials say they expect a green light to be given to draw up a more detailed legal proposal.
The vast majority of the assets are held by international deposit organisation Euroclear in Belgium, and the Belgian government is insisting on guarantees from other EU countries that they would share risks linked to using the funds.
While the debate remains at an early stage, the commission is already trying to set out what the loan could be used for if it is handed to Kyiv.
“Several Member States have suggested that the proceeds of the loan should be used primarily for defence procurement in Europe,” the commission said in a document to be discussed by EU ambassadors on Friday.
It said a “good middle ground” would be to dedicate the biggest chunk of the money to helping arm Kyiv under rules that would “in principle restrict procurement to Ukraine and the EU.”
The document said the rest of the loan could be used for plugging Ukraine’s budget, and opened the door to some money being used to fund weapons purchases from the United States.
That comes as Europe seeks to keep US President Donald Trump on board with supporting Kyiv, ahead of a potential summit with Russian President Vladimir Putin in Budapest.
EU military heavyweight France has long pushed for money provided by the bloc to Ukraine to be spent on bolstering Europe’s defence industry.
But EU officials caution that discussions of how the new funds should eventually be spent are in their infancy given that the bloc is still far from an agreement on establishing the loan.
“It’s very much a work in progress,” a senior official said.
The Belgian government has flatly rejected calls to confiscate the Russian funds outright and hand them to Kyiv.
To get around those concerns, the European Commission scheme would borrow funds from Euroclear that have matured into cash.
That money would then in turn be loaned to Ukraine, on the understanding that any funds Russia pays towards post-war reparations would be used to reimburse the Europeans.
The European Commission meanwhile says that other G7 powers should also look to replicate the proposed EU loan to Ukraine with money frozen on their turf.
Add Comment