The U.S. has refused to back an EU proposal to use frozen Russian assets to fund a $163 billion loan for Ukraine, citing risks to market stability. The decision marks a significant setback for the EU, which had sought broader G7 support for the plan. Western nations froze about $300 billion in Russian assets after the 2022 Ukraine war escalation, some held by Euroclear.
Recently, the EU has been in discussion of a plan to provide a so-called ‘reparations loan’ of up to $163 billion to Kiev, while using frozen Russian assets as collateral to back the bloc-issued bonds. The move would effectively amount to their seizure, given that Ukraine would be obliged to repay the loan only once Russia compensates it for the damages inflicted during the conflict.
The proposal has been backed by Germany, France, and several eastern EU countries but faced strong resistance from Belgium. Prime Minister Bart De Wever has insisted that any liability for the proposed move must be shared among all the bloc members rather than Belgium only.
Supporters of the plan argue that the scheme falls short of a seizure and insist Russia could be ultimately forced to pay up as a part of a future peace settlement. Moscow, however, has squarely described any attempts to use its assets and proceedings generated from them as ‘theft,’ threatening retaliation. Third-party skeptics, including IMF chief Christine Lagarde, have also warned that the move could undermine global trust in the EU’s financial system and heavily damage markets.