EU to discuss two options for financial support for Ukraine for coming years - Reuters
Kyiv • UNN
The European Union will discuss two main ways to raise financial support for Ukraine: borrowing or using frozen Russian assets. EU finance ministers are meeting in Brussels after pledging to cover Ukraine's needs in 2026-2027.
The European Union will discuss two main ways to attract financial support for Ukraine on Thursday: borrowing or the more likely option of using frozen Russian assets, Reuters reports, citing a high-ranking EU official, UNN writes.
Details
EU finance ministers are meeting in Brussels after the bloc's leaders pledged on October 23 to cover Ukraine's needs in 2026-2027 and asked the European Commission to prepare options for resolving the issue.
An EU official close to the negotiations said that the European Commission's document with financing options is not yet ready, but there are only two realistic ways to provide Ukraine with 130-140 billion euros (152-163 billion US dollars), which will likely be needed.
One option is to use frozen Russian assets, as proposed by the European Commission. Last month, Russia said any such move would be illegal and threatened a "painful response."
Another option involves EU governments borrowing funds from the market, but this would require interest payments.
Most Russian assets frozen in Europe are held in accounts at the Belgian securities depository Euroclear. After Moscow's invasion of Ukraine in February 2022, almost all securities have already been redeemed and converted into cash.
The option involving frozen assets would mean that the EU would replace Russian cash in Euroclear accounts with coupon-free AAA bonds issued by the European Commission.
The funds would then go to Ukraine, which would repay the loan only if it receives war reparations from Russia, effectively turning the loan into a grant and providing an opportunity for Russian reparations to compensate for damages before the end of the war. This option is called a "reparation loan" because it is linked to Russia's payment of reparations.
Under this arrangement, the only financial contribution from the governments of the European Union will be the provision of guarantees for the European Commission's loans issued to Euroclear. The risk of requesting guarantees is very small, as EU governments themselves decide when to unfreeze frozen Russian assets.
"In my opinion, EU leaders will choose the reparation loan model," a high-ranking EU official said.
However, Belgium, where Euroclear is based, believes it would be liable if Russia's claim against the company is successful. It demands that EU governments commit to providing the necessary funds to repay the debt to Moscow within three days if a court ever rules that the assets must be returned.
EU government officials say that while this is unlikely to be necessary, mobilizing potentially more than 100 billion euros in three days would be a serious challenge for the EU.
Belgium also wants the European Commission to create a strong legal framework for the entire operation to minimize the risk of losing in court, and has asked other EU countries with frozen Russian assets to join the scheme to share responsibility.
The European Commission is currently negotiating with Belgium to meet its demands in order to secure the support of EU leaders for this plan in December.
Another option would be for EU governments to borrow funds from the market and transfer these funds to Ukraine.
For them, this is a much less attractive option, as it would lead to an increase in the debt levels of many already heavily indebted countries and would entail the payment of annual interest throughout the term of the loan, either by Ukraine, which can hardly afford it, or by the EU, the publication writes.