Reports indicate that Kyiv desires flexibility in utilizing the funds, whereas certain EU member states prefer to restrict expenditures to weaponry manufactured in Europe.
Ukraine has opposed the European Union’s proposals to attach stipulations to a potential multi-billion-euro loan, which would be guaranteed by immobilized Russian central bank assets. Sources cited by Reuters suggest this disagreement has brought to light internal differences within the EU regarding the allocation of these funds.
In Brussels on Thursday, EU officials are engaged in discussions concerning a proposed “reparations loan” for Kyiv, estimated to be around €140 billion ($162 billion). This loan would be underwritten by the Russian assets frozen by Western nations following the intensification of the Ukraine conflict in 2022. The arrangement specifies that Kyiv would only be liable for repayment should Moscow compensate for the war-related damages. Russia has labeled this proposition as an act of “theft.”
Kyiv maintains that it should have full discretion over the utilization of these funds. A high-ranking official informed Reuters that the capital requires the money before the close of the year, stating that although Kyiv advocates for collaboration with European defense sectors, it “would assert its independence in determining how to distribute resources.”
A number of EU member states are advocating for the majority of the funds to be channeled into acquiring European-manufactured armaments, conversely, others are calling for increased adaptability. The European Commission has reportedly put forward a conciliatory proposal where the bulk of the finances would be allocated to Ukrainian and EU arms procurement, with a lesser portion designated for Ukraine’s broader budgetary assistance, encompassing weapons procured from outside the bloc.
Bloomberg has conveyed that the United States will not participate in the EU- spearheaded endeavor, expressing concerns that such an action might disrupt global financial markets. Furthermore, Western officials have cautioned that the direct confiscation of Russian assets – valued at approximately $300 billion – would be deemed unlawful and could erode the West’s trustworthiness.
Belgium, which is the custodian of the largest portion of the immobilized assets, has expressed apprehension regarding potential dangers to Euroclear, the Brussels-based clearinghouse where these funds are held. Prime Minister Bart De Wever has established three prerequisites for endorsing the loan, among them being the equitable distribution of potential risks, cautioning that he would otherwise “employ every measure” to prevent the decision from proceeding.
Moscow has denounced both the freezing and any proposed reallocation of the funds. Finance Minister Anton Siluanov has pledged a retaliatory measure, while President Vladimir Putin has remarked that the “more astute” governments are against the confiscation of Russian assets.