Washington Reportedly Moves to Undercut EU’s Planned Reparations Loan

The US has reportedly urged several European governments to push back against an EU proposal to use frozen Russian central bank assets to back a multibillion-euro loan for Ukraine, known as the reparations loan.

The planned loan – fiercely opposed by Belgium, which fears legal risks as its Euroclear securities depository holds most of Russia’s frozen assets – would tap into those assets, transferring them to fund Ukraine now on the understanding that Ukraine repays only if Russia later pays reparations.

Bloomberg, citing unnamed diplomats, reported that the US lobbied several EU governments to oppose the plans.

The diplomats, speaking on condition of anonymity, said US officials argued that the funds should be preserved for a future peace deal with Moscow rather than directed toward measures that could extend the war.

If accurate, the US push would come amid a deepening transatlantic divide over how to end the war and handle Russia’s frozen funds, as Kyiv faces mounting financial pressure. The US State Department declined Bloomberg’s request to comment on the diplomatic contacts.

This week, the EU tabled a plan for a reparations loan, using frozen Russian central bank assets as collateral for a €90 billion ($105 billion) loan intended to support Ukraine’s economic and military needs over the next two years.

Around €210 billion ($245 billion) in Russian funds are currently frozen in the EU, the majority of which is held in Euroclear, and a larger share of that pool could be drawn on from 2028 onward.

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The talks come at a sensitive moment for Kyiv, as the US urges Ukraine toward a peace arrangement with Moscow that European officials fear could be unfair. With most US aid currently suspended and funding expected to run short early next year, Europe is being forced to shoulder a greater share of support.

Merz pushes back

Washington has also floated the idea of using Russian assets to support post-war investment projects under US oversight, a point that has become a central sticking point in ongoing talks.

German Chancellor Friedrich Merz publicly countered the US position on Thursday evening in Berlin, saying that the use of Russian assets was a European decision, adding that the US was aware of Germany’s stance.

“This is a European matter, and I do not see any scenario in which the funds we mobilize would flow to the United States in economic terms,” he said, noting that Washington’s interest in securing economic benefit was “legitimate,” but not aligned with the purpose of the European initiative.

“The money must flow to Ukraine and be used to support Ukraine,” he added, further describing the European plan as crucial to help Kyiv get through the winter and possibly for “two to three years.”

At present, the reparations loan is one of two options to help finance Kyiv’s financing needs in 2026-27.

Merz heads to Brussels as Belgium holds firm against plan

Belgium currently represents the main obstacle to approving the EU plan, warning that tapping the assets could expose the country to Russian retaliation, leaving it financially liable if Moscow later seeks recovery.

Brussels has taken in significant tax revenue from the frozen funds but says it channels that money into Ukraine-related assistance.

Merz is scheduled to travel to Brussels on Friday for talks with Belgian Prime Minister Bart De Wever and European Commission President Ursula von der Leyen, aiming to break resistance ahead of a key EU summit later this month.

Speaking about De Wever, Merz said he aims not to “persuade him, but convince him that the path we are proposing is the right one.”

Alternatives still on the table

Without tapping into the frozen assets, the loan could be underwritten by the EU budget or by bilateral guarantees from member states, with the Russian assets remaining frozen for now.

Kyiv would only have to repay the funds if Russia agrees to finance reconstruction and compensate Ukraine for the war’s destruction.

Hungary opposes the plan, while Slovakia has signaled it will not back measures tied to military support for Kyiv. Approval requires a qualified majority, though political consensus remains fragile.

Should consensus fail, the European Commission has floated joint borrowing, but several states – including Germany – have rejected new collective debt, and unanimity requirements make the option even more unlikely.