EU’s bold move: €210 billion reparations loan to Ukraine amid Belgian roadblocks

In a dramatic escalation of financial pressure on Russia, the European Commission has reportedly found a solution how to channel up to €210 billion in loans to Ukraine, leveraging frozen Russian Central Bank assets as collateral.

Former Ukrainian central banker Kyrylo Shevchenko hailed this as “breaking news” in a viral X post on 8 December, emphasizing a legal mechanism that could indefinitely immobilize these assets while bypassing potential vetoes from EU member states sympathetic to Moscow.

⚡️BREAKING: Brussels has unlocked a legal mechanism allowing indefinite freezing of Russian central bank assets without unanimous EU consent—bypassing any Hungarian veto—by citing “economic disturbances caused by Russia’s war on Ukraine.” The European Commission @EU_Commission… pic.twitter.com/EVSr0wfLwd
— Kyrylo Shevchenko (@KShevchenkoReal) December 8, 2025

With Ukraine’s economy teetering under the weight of ongoing war, this initiative represents a shift from mere asset profits to a more aggressive use of the principal, potentially marking the dawn of what Shevchenko termed an “era of outright confiscation.”

The proposal, formally released on 3 December, outlines a “Reparations Loan” framework designed to address Ukraine’s staggering €137 billion in financial and military needs for 2026–2027. Under this plan, the EU would borrow against the cash balances generated by approximately €210 billion in immobilized Russian assets, primarily held in the EU – €185-194 billion at Belgium’s Euroclear depository, plus €25 billion scattered across accounts in France, Germany, and other nations. The funds would be disbursed in flexible tranches, up to six per year, with an initial €90 billion targeted by the end of 2027. Breakdowns include €115 billion for bolstering Ukraine’s defence industry – such as drone production and munitions factories – and €95 billion for budget support, including repayments on existing G7 loans and civilian essentials like salaries and reconstruction.

What makes this “breaking” is the invocation of Article 122 of the Treaty on the Functioning of the European Union (TFEU), which classifies Russia’s invasion as an “exceptional occurrence” causing widespread economic disturbances across the bloc. This allows for qualified majority voting (QMV) – requiring support from at least 15 member states representing 65% of the EU population – to extend the asset freeze indefinitely, sidestepping the current unanimity requirement.

Previously, leaders like Hungary’s Viktor Orbán could potentially block renewals, but this mechanism ensures the assets remain locked until Russia compensates for war damages, in line with UN Charter principles and international law on state responsibility.

Shevchenko’s tweet, amassing over 172,000 views in hours, amplified this as a pivotal breakthrough, especially amid an 8 December letter from seven EU nations urging swift action.

Yet, the proposal’s path forward is fraught with challenges, chief among them Belgium’s staunch opposition. As the custodian of the lion’s share of these assets through Euroclear in Brussels, Belgium fears bearing disproportionate risks in what it views as a high-stakes gamble. Prime Minister Bart De Wever has labelled the plan “fundamentally wrong,” warning of “disastrous consequences” including legal battles that could bankrupt the nation. Foreign Minister Maxime Prévot echoed this, calling it “categorically unacceptable” and criticizing the Commission for downplaying concerns

Belgium’s reluctance stems from multifaceted risks. Legally, Russia could pursue claims in Belgian courts or under bilateral investment treaties, seeking compensation far exceeding the assets’ value – potentially including compound interest and lost investment opportunities. Financially, Euroclear’s contractual obligations to repay Russia if sanctions lift could trigger liquidity crises, necessitating bailouts without guaranteed EU backstops. Reputationally, undermining Euroclear’s neutrality might erode investor confidence in the eurozone, as highlighted by ECB President Christine Lagarde’s concerns over systemic stability. Politically, Belgium feels isolated, arguing that while the EU benefits collectively, it shoulders the brunt without full reciprocity.

Commission President Ursula von der Leyen has attempted to assuage these fears with a “three-tier defence” of guarantees: member-state contributions proportional to gross national income (led by Germany at €51 billion), a Union liquidity mechanism, and burden-sharing for any damages. She claims the proposal addresses “almost all” Belgian objections, invoking EU solidarity principles. However, as of 9 December, negotiations remain deadlocked, with recent talks yielding no resolution. Belgium prefers safer alternatives, like €45 billion in direct EU budget borrowing, over the asset-backed loan.

Russia’s frozen assets stalemate: EU countries will need to individually commit billions of euros

The upcoming EU summit on 18-19 December in Brussels will be decisive. Supporters, including Nordic and Eastern European states, see this as essential leverage against Russia, especially with U.S. aid uncertainties under a potential Trump administration. Russia, meanwhile, has decried the move as “theft tantamount to war,” vowing retaliation.

If approved, this could redefine international responses to aggression, transforming frozen assets into active reparations tools. But Belgian opposition underscores the EU’s internal fractures, where solidarity clashes with national self-interest.

The European Commission’s creative legal manoeuvres to unlock billions in frozen Russian sovereign assets emerge as Washington intensifies pressure for a negotiated end to the war on terms widely seen as amounting to Ukrainian capitulation, while several EU allies quietly fear being left to shoulder Kyiv’s massive financial and military support alone if U.S. aid dries up.

Caption: The Euroclear group headquarters in Brussels, Belgium, 5 December 2025. The German Chancellor, Belgian Prime Minister, and European Commission President hold meetings in Brussels to discuss the EU’s proposal to use frozen Russian assets to fund Ukraine, as well as financial and judicial guarantees for Belgium. EPA/OLIVIER MATTHYS