The EU plans to provide Ukraine with a hypothetical loan of € 140 billion from frozen Russian assets. German Chancellor Friedrich Merz proposes a safe legal solution.
On Thursday, German Chancellor Friedrich Merz proposed to use frozen Russian assets to release an interest -free loan of EUR 140 billion to help Ukraine by the European Union. According to him, the EU could provide this money Kiev without interfering with Russia’s property rights. Money would only be returned after Russia pays Ukraine for the damage caused by it during the war. According to AFP and Reuters, TASR reports this, which refer to the article of the Financial Times.
Western allies of Ukraine, after the beginning of the Russian invasion, frozen Russian assets worth several hundred billion euros. However, according to Reuters, the EU governments avoid the confiscation of these funds because they fear that this could undermine confidence in the euro as a reserve currency.
Therefore, the EU is trying to find a new way to use Russian money, which is mainly stored in the EuroClear Brussels depository. In her speech on the state of the EU at the beginning of September, the President of the European Commission (EC) Ursula von Der Leyen called for a new “reparation loan” for Ukraine.
Germany had been concerned in the past
According to Politico sources, the new plan is that billions of euros from Russian state money, which are currently stored in the Belgian depository, will be sent to Ukraine and the funds used will be replaced by bonds guaranteed by the European Union. By replacing frozen funds by bonds, the European Commission would try to avoid allegations of illegal confiscation of the Russian State’s property.
Given that Ukraine is in danger of a high state budget deficit next year, the EC considers this solution to be the last chance to financially support Kiev without using European taxpayers’ money. Reuters recalls that the EU has so far only used interest on Russian assets. Germany, the largest EU economy and the second largest military supporter of Ukraine, previously expressed concern about any proposals for complete confiscation of assets.
“Now is the time to use an effective lever that disrupts the cynical game of the Russian president, who buys time and brings it to the negotiating table,” Merz said. He wants to talk about its proposal with EU Member States leaders at the informal summit in Copenhagen next week.
