European Commission explains the mechanism of "reparations loan" for Ukraine

The European Commission on Monday held a technical briefing on the mechanism of a future "reparations loan" for Ukraine, a correspondent reports. LIGA.net .

"In order to withstand this [Russian] aggression, Ukraine needs significant resources. If they are not provided, it will probably lead to the collapse of Ukraine, which will pose a serious risk to the security of Europe. The U.S. position on financial assistance has changed, and we can no longer rely on significant U.S. contributions. Therefore, we have revisited the issue of Russia's assets. The challenge is how to use these assets in a way that respects sovereignty and complies with international law. We believe that we have found a viable solution that does not involve confiscation," the European Commission's press service said .

A key element of the scheme is Euroclear, the international securities depository that holds most of Russia's assets in Europe.

As of the beginning of October 2025, Euroclear holds about €175 billion in cash collected from the redemption of Russian debt securities. This amount is expected to grow to €185 billion over the coming years.

Due to the sanctions, Euroclear is prohibited from returning these funds to Russia, and they are accumulating on accounts with the depository.

The European Union confirms that Russia's claims to the frozen assets remain legally intact, but the money itself is proposed to be invested in a special debt instrument. It will become the basis for a "limited" loan to Ukraine.

"Restricted" means that Ukraine is obliged to repay the loan only after Russia pays reparations.

"We are actually borrowing money from Euroclear, which holds Russia's assets. Among these assets is cash, which is now on the Euroclear account due to sanctions. These are funds that were supposed to be returned to Russia, but because of the sanctions, they are frozen," said EU officials .

The loan will require guarantees from EU member states in the amount of up to EUR 85 billion, but the European Commission considers the risk of their realization to be minimal. The guarantees will be provided on a bilateral basis, and the exact mechanism of distribution (voluntary or based on GDP) is still being discussed.

"If Russia fails to pay the reparations, Member States may decide to lift the sanctions, but the financial consequences will be borne by them," the EC said .

The proposal is at an early stage, the Commission will continue discussions with Member States to improve the details.

• The idea of a "reparations loan" based on the cash balances of Russian assets frozen in the West after Russia's full-scale invasion of Ukraine in 2022 was put forward on September 10.
• Later it became known, that the amount of aid will be measured in tens of billions of euros – probably, up to 140 billion euros .
• This mechanism of financial assistance to Ukraine by the EU will provide money in tranches and under certain conditions.
• According to Reuters, on October 2, European leaders generally agreed to the idea of using Russian assets frozen in the EU to provide Ukraine with a €140 billion loan, but have not yet agreed on all the details.