The EU’s proposed reparations loan plan for Ukraine poses no additional risk to Euroclear or Belgium, as their holdings would simply shift from cash to equivalently valued EU bonds, New York-based attorney Jamison Firestone said during a briefing in Kyiv.
The loan, backed by the €176 billion ($191 billion) in frozen Russian central bank assets held at Euroclear in Belgium, would allow the EU to provide Ukraine with long-term funding as the country continues to face financial strain from Russia’s prolonged full-scale invasion.
Under the proposal, frozen Russian cash held at Euroclear would be replaced with bonds issued by the EU or its member states. The funds originate from Russian bonds that have matured.
Firestone explained the legal foundation of the EU’s plan, emphasizing that it “takes nothing from Euroclear or Russia.”
“We are not taking anything from Euroclear or Russia,” he said. “Russia’s balance in Euroclear remains unchanged, as does Euroclear’s balance. Nothing is being taken from anyone.”
EU plan to fund Ukraine swaps frozen Russian assets for bonds
The new EU proposal does not entail confiscation of Russian assets or the direct use of Russian cash, Firestone said.
Euroclear’s obligation to Russia would remain intact, with Russia’s balance still showing €176 billion ($191 billion). The only alteration would be in the asset’s form: Euroclear would hold EU bonds instead of cash, leaving both parties’ financial positions unchanged.
Firestone added that the main obstacle to implementing the plan is the demand by Belgium and Euroclear for compensation to offset the potential risks they might assume.
However, Belgium’s objections could delay the process, according to a Financial Times (FT) report.
Belgian Prime Minister Bart De Wever has insisted that the other 26 EU countries share the legal and financial risks and jointly guarantee the loan to prevent Belgium from being solely liable for repayment.
“[Belgium] has spent three years saying Euroclear is Belgian and so are the benefits,” one senior EU diplomat told the FT. “Now, when it wants to share the risks, it claims Euroclear is European.”
Belgium and Euroclear seek guarantees despite no added risk
According to Firestone, the main risk lies with the EU – and only if sanctions on Russia are lifted. As long as sanctions remain in place, the EU would not need to redeem the bonds held by Euroclear or convert them into cash, meaning no payments would be required.
The risk would emerge only if Brussels lifts sanctions before Russia compensates Ukraine. In that scenario, the EU would have to honor its bonds, prompting Euroclear to transfer EU funds to Russia – effectively financing Moscow’s war effort.
Thus, Firestone noted, the EU has a vested interest in maintaining sanctions until Russia pays reparations.
The EU’s proposed “reparation” loan to help Ukraine fund its war effort by drawing on the value of frozen Russian assets could reportedly be as much as €130 billion ($153 billion).
Three senior EU officials said the figure is derived by subtracting last year’s €45 billion ($53 billion) G7 loan – expected to be repaid first – from the roughly €175 billion ($206 billion) in frozen Russian cash held across Europe.
The final loan amount will be determined following an International Monetary Fund (IMF) assessment of Ukraine’s economic needs.
IMF estimates Ukraine’s 2026–2029 financing gap at $65 billion
The International Monetary Fund (IMF) has estimated Ukraine’s financing gap for 2026–2029 at $65 billion, according to a well-placed source who spoke to Kyiv Post.
Ukraine expects $37.4 billion in international financing over the next two years, leaving a similar shortfall, the ministry said earlier.
The National Bank of Ukraine (NBU) projects $35 billion in external inflows in 2026 and $30 billion in 2027, but Deputy Governor Sergiy Nikolaychuk noted that funding sources remain unidentified for $12.7 billion in 2026 and $29 billion in 2027.