The EU failed to agree on the use of frozen Russian assets for a loan to Ukraine

EU suspends key decision on loan to Ukraine amid use of frozen Russian assets

EU member states failed to agree on a proposal to use up to €140 billion of frozen Russian state assets to provide a large-scale loan to Ukraine, reports POLITICO Europe with reference to diplomatic sources.

What was offered

The initiative envisaged the creation of a so-called «reparations loan» that Ukraine could receive in 2026-27. The loan would be secured by income or capital from Russian assets that were frozen after Russia's full-scale invasion in 2022.

Conditions in Ukraine

Kyiv insists that any additional conditions on the use of the funds are unacceptable to it. In particular, Ukraine demands full freedom to use the funds for defence, reconstruction and compensation, not just for the purchase of arms from the EU.

Obstacles and risks

The biggest objections came from Belgium, which is where a significant portion of Russia's frozen assets are kept. Belgium expressed concern that the use of the assets would set a precedent, and Moscow could respond legally or financially.

In addition, legal experts warn that the use of assets without a clear legal framework could undermine confidence in the property protection system, affect the euro and the investment attractiveness of Europe.

What it means

• Ukraine risks a delay in receiving funding for key needs in 2026-27 until the EU agrees on a mechanism.

• The EU shows further divisions among its member states over sanctions and funding for Ukraine.

• Russia retains minimal benefits: the plan, if implemented, is postponed, giving the Kremlin time and space for diplomatic and legal manoeuvres.