The EU may transfer Russian assets to Ukraine in the format of a «reparations loan»

What happened

The European Commission presented the idea of reparation loan For Ukraine: funds are provided in advance by cash balances related to frozen Russian assets in the EU, and Ukraine will start returning them after Russia pays reparations. The principle of the assets remains intact, and the risks are covered by the collective guarantees of the member states. This was stated by European Commission President Ursula von der Leyen in her speech to the European Parliament on 10 September.

How it will work

• Source of funding: not confiscation of funds, but Use of cash balances/profits related to assets, The company has already «frozen» the funds in the EU (mainly in Euroclear).
• Mechanics: The EU issues debt/loans secured by these flows; the asset base remains intact.
• Repayment: deferred - until Russia pays reparations; In this case, the loan is considered «repayment».

Link to the G7 plan

The idea complements the existing framework $50bn G7 loan, which is provided by excess profits (windfall) from frozen Russian assets, mainly in Europe. The EU has already made payments under this scheme in 2025. The «reparations loan» is seen as an opportunity to Increase the volume of aid, without touching the principal.

Legal and financial safeguards

The key is. risk-sharing between all 27: a number of capitals (primarily Belgium, where €190bn in Euroclear is concentrated) are declaring their readiness to move on subject to the distribution of legal risks at the EU level and preserving assets «like a hen laying golden eggs» (a source of permanent income). Direct confiscation is proposed to be avoided in order not to undermine confidence in the European financial system.

Why it is important for Ukraine

• Fast cache stream during the long war without political delays in each capital.
• Stability of funding from reconstruction and energy to defence, with a multi-year horizon.
• A signal of the Russian Federation's responsibility: the assets remain blocked until the losses are recovered, which is in line with the EU and G7 position of 2024.

What's next

The European Commission is preparing technical parameters (amount, form of debt, guarantees, legal structure) and consultations with member states. At the same time, the European media is discussing a «creative» scheme with replacement of funds with EU bonds, to send money to Kyiv faster without confiscating the principal. The decision may become one of the key ones at the upcoming EU councils.