The EU would need to make a “concerted effort” to calm financial markets if a mooted €140 billion ($162 billion) loan to support Ukraine using Russian sovereign assets goes ahead, the European Commission has warned.
In a long-awaited letter sent to EU capitals on Monday, and seen by Euractiv, Ursula von der Leyen has presented EU leaders with three options to cover Ukraine’s substantial financing needs for 2026–2027, including the so-called reparation loan.
Brussels said its push to use immobilized Russian central bank assets held in Belgium entails a risk of “knock-on effects” if the loan is incorrectly perceived by others as a confiscation.
These assets, estimated to be worth up to €185-210 billion ($214-$243 billion), would be used to lend to Ukraine at zero interest, with repayment conditional on future reparations. EU countries would provide guarantees to cover potential legal or financial risks.
“As this option would be a financially and legally innovative solution, it cannot be discounted that there are potential knock-on effects, including for financial markets,” the Commission noted.
“A concerted effort by the Union, and possibly international partners, to counteract such perception would need to be made,” it added, noting that this “risk can also be further reduced if international partners take similar measures to the reparations loan.”
The concerns echo those long voiced by Belgium, which holds the Russian sovereign assets that would be used for the loan, and which has demanded that its associated financial and legal risks be shared among EU member states.
Belgian Prime Minister Bart De Wever has also demanded that other countries holding Russian assets also use them to support Kyiv’s war effort. Outside the EU, the US, the UK, and Japan all also hold billions of euros’ worth of Russian sovereign assets.
Ukraine faces a financing gap of €135.7 billion ($157.3 billion) over the next two years, and the Commission is urging leaders to agree on a model that can deliver funds by the second quarter of 2026, in line with an upcoming IMF program.
The letter also lays out two distinct alternatives for supporting Ukraine, including bilateral member state grants and raising cash by issuing common EU debt.
The first, the most straightforward, would see capitals providing direct grants to the EU, distributed by GNI share, worth around €45 billion ($52 billion) annually.
The second, meanwhile, would allow the EU to borrow on financial markets, offering Ukraine a “limited recourse loan” to be repaid only once it receives reparations from Russia, with Member States providing guarantees against default.
Von der Leyen stressed that the three models are not mutually exclusive and could be combined or sequenced to ensure timely, predictable, and sustainable support.
EU leaders are expected to provide political guidance in December on which approach to pursue.
“It will now be key to rapidly reach a clear commitment on how to ensure that the necessary financing for Ukraine will be agreed at the next European Council meeting in December,” von der Leyen wrote.
See the original of this article by Nicoletta Ionta and Thomas Moller-Nielsen for Euractiv here.