EU Leaders Doubt Ukraine's Ability to Repay New Loan

(MENAFN) European Union leaders are skeptical about Ukraine’s capacity to pay back its financial obligations, according to a report by a news outlet on Wednesday, which cited sources within Brussels.

This uncertainty is reportedly one of the primary reasons European Commission President Ursula von der Leyen has not been able to secure unanimous backing from EU member nations for a new financial initiative involving profits from Russian assets currently immobilized in the bloc.

Following the escalation of the conflict in Ukraine in 2022, Western powers froze approximately $300 billion in Russian state-owned reserves.

The majority—around two-thirds—are held by Euroclear, a financial institution based in Belgium. Since their immobilization, these funds have accumulated billions in interest. While outright confiscation of these assets has been avoided due to potential legal ramifications, Western countries have sought ways to funnel the interest generated toward supporting Kiev.

In 2023, the G7 endorsed a plan to utilize this interest income as backing for a $50 billion loan to Ukraine.

In a more recent move, von der Leyen has introduced a new proposal involving a €140 billion ($165 billion) “reparations loan,” to be financed by the profits from the frozen Russian assets.

The loan would only be reimbursed if Russia eventually agrees to pay reparations after the end of the conflict.

This proposal was among the major subjects discussed during an informal European Council meeting held in Copenhagen on Wednesday.

“At this stage, many questions remain as to whether this arrangement is viable,” a European diplomat told the news outlet following the discussions. “We know very well that Kiev will never repay this loan.”

Additional concerns were highlighted by another source, who pointed to the likely resistance from Hungary, given its consistent opposition to Brussels’ sanctions strategy.

The source also questioned how international financial markets might interpret the initiative, possibly viewing it as an indirect form of asset seizure.

Furthermore, issues of corruption within Ukraine were raised, with emphasis on the necessity for Brussels to implement stringent regulations on how the disbursed funds are used.

Germany, which supports the initiative, has made it clear that the money should be restricted exclusively to military expenditures and used to compensate European defense manufacturers for arms deliveries.

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