EU leaders are racing to a decision at next week’s summit on whether to turn up to €210 billion of frozen Russian sovereign assets into a “reparations loan” for Kyiv. The proposal, championed by Germany’s Chancellor Friedrich Merz, aims to fund roughly two‑thirds of the €135.7 billion Ukraine says it needs for the next two years — the balance to come from other EU sources and private markets — but it has met fierce resistance from Belgium, which hosts most of the assets at the clearing house Euroclear.
Belgium’s legal and fiscal stakes
Belgian Prime Minister Bart De Wever has warned that the plan could expose Belgium to a “bankruptcy‑level” liability if Russia successfully sues over the use of the assets. He has written to European Commission President Ursula von der Leyen demanding legally binding guarantees from all member states before Belgium would endorse the loan — a concern echoed by Euroclear chief Valérie Urbain, who said the move could destabilise the international financial system. Professor Veerle Colaert of KU Leuven noted that Belgium’s €565 billion GDP could not absorb a €185 billion hit without severe consequences.
According to bbc.co.uk, the Russian Central Bank has already filed a lawsuit against Euroclear in Moscow, and the EU’s legal team insists that EU‑based institutions will be “fully protected” from Russian court rulings.
EU’s two financing pathways
The Commission is weighing two options. The first is a market‑based €90 billion bond issuance backed by the EU budget, which Belgium prefers because it avoids direct exposure to the frozen assets. However, that route requires unanimity among all 27 capitals, and countries such as Hungary and Slovakia have signalled they may block a large‑scale military‑aid package.
The second option would convert the cash‑equivalent assets held at Euroclear into a loan to Ukraine, with the EU providing a guarantee that covers the full €210 billion pool. The Commission says any Russian court judgment would not be recognised in the EU, and the assets would remain immobilised indefinitely under an emergency clause of Article 122 of the EU treaties, the same mechanism that halted the six‑monthly renewal votes on the freeze.
Swedish Finance Minister Elisabeth Svantesson described the indefinite immobilisation as “an important step in enabling more support for Ukraine and protecting our democracy” — a sentiment echoed across the Baltic states, Finland and Poland, which view the plan as the most feasible way to keep Ukraine funded while the war drags on.
Geopolitical frictions with the United States
Washington, under President Donald Trump, is pushing its own peace blueprint that envisions a different use of the frozen assets. A draft of the US plan reportedly allocates $100 billion of the assets to a joint reconstruction fund, with the United States taking half the profits and Europe contributing another $100 billion. If that scheme were to gain traction, EU members would have to vote on a costly financial commitment that could clash with their own domestic budget constraints.
The tension was highlighted during a meeting in London where Ukrainian President Volodymyr Zelensky, British Prime Minister Sir Keir Starmer, French President Emmanuel Macron and German Chancellor Friedrich Merz discussed a revised peace draft. Zelensky reiterated that Ukraine will not cede any territory, emphasizing that any settlement must include “hard‑edged security guarantees” and a path to NATO membership—an outcome the US has so far resisted.
For further context on the US‑EU divergence, see reuters.com which outlines the Trump administration’s proposal and its potential impact on transatlantic negotiations.
Implications for regional stability
If the EU adopts the reparations‑loan model, it would signal the bloc’s willingness to leverage sanctions assets for defence spending, a move that could set a precedent for future conflict‑related financing. Conversely, a failure to reach a consensus could deepen the funding gap for Ukraine, potentially weakening its ability to resist further Russian offensives in the Donbas and jeopardising the security architecture of Central and Eastern Europe.
The decision also carries legal ramifications: a successful Russian claim against Belgium or Euroclear could trigger a cascade of litigation across Europe, testing the resilience of the EU’s financial safeguards.
As Belgium, the Netherlands and other reluctant members negotiate the final text, the outcome will shape not only Kyiv’s war‑fighting capacity but also the credibility of the EU’s collective response to aggression, reinforcing or eroding the alliance’s strategic cohesion at a time when NATO members are already facing budgetary pressures and divergent threat assessments.
Next diplomatic steps
EU ambassadors are set to convene on Thursday to finalise the legal text that would lock the assets in place “for as long as an immediate threat to the economic interests of the Union continues,” according to the Commission. Simultaneously, Kyiv plans to present a revised peace proposal to the White House in the coming days, seeking to align European and US positions while preserving its territorial integrity.
Belgian Foreign Minister Maxime Prévot has called for a “legally binding guarantee” that spreads the risk across all member states, a demand likely to shape the final wording of the loan guarantees. The coming week will therefore be decisive in determining whether Europe can marshal the financial firepower needed to sustain Ukraine’s defence and reconstruction, or whether internal dissent will stall the process, leaving Kyiv to confront an increasingly isolated battlefield.
