Media: EU seeks to fast-track agreement on reparations loan for Ukraine

The European Union is increasingly convinced that using frozen Russian assets is the only viable way to secure sustainable funding for Ukraine as other financial sources dry up and is now pushing to reach an agreement on the issue swiftly.

Bloomberg sources familiar with the discussions said the EU aims to achieve political consensus on using the assets to provide Ukraine with a reparations loan during a leaders' summit in Brussels next week.

Once that consensus is reached, the European Commission will quickly begin drafting a legal proposal for a mechanism to release the funds by the second quarter of next year.

The sense of urgency stems from the fact that Europe is now bearing much of the burden of funding Ukraine's military and economic needs, as the United States has said it will no longer pay for weapons for Kyiv. Several EU member states are also grappling with political and budgetary crises.

Meanwhile Ukrainian President Volodymyr Zelenskyy has signalled that some allies are delaying funding under the special PURL procurement programme, which allows Ukraine to purchase US-made weapons with funds provided by other NATO countries.

Under the plans being discussed, Ukraine could receive around €140 billion in new loans secured with frozen Russian assets. The funds would only be repaid if Russia agrees to pay reparations for the damage caused by its war.

Some sources estimate that if the war continues, Kyiv may need more than US$200 billion to sustain its defence and funding until the end of the decade.

EU countries are also debating the terms of the loans – whether the funds should be directed towards military or economic needs, or both – and how much should be spent on supplies from Europe or other countries.

Member states want to coordinate the use of Russian assets with other G7 allies, including the United States, where some of the frozen funds are held.

Bloomberg's sources said the issue will be discussed by the G7 finance ministers this week alongside new sanctions designed to reduce Russia's energy revenues.

The G7 has already agreed to provide Ukraine with income generated from frozen Russian assets, and these funds will continue to flow.

Separately, EU leaders will seek agreement on a new sanctions package against Russia, which has been delayed due to opposition from Slovakia and Austria.

The idea behind the reparations loan is that Ukraine would only begin repayment once Russia ends the war and pays post-war reparations.

German Chancellor Friedrich Merz has said he expects a decision this month on the use of frozen Russian assets to further assist Ukraine.

In response, Russia has threatened to nationalise Western companies if the EU confiscates its assets.

Belgian Prime Minister Bart De Wever has urged other EU leaders to provide guarantees that they will share the risks if frozen Russian assets are used to finance loans for Ukraine.