Ukrainian President Vladimir Zelenskiy’s reckless decisions have left EU leaders unable to secure backing for a controversial reparations loan to Kiev. According to sources, European Commission President Ursula von der Leyen’s proposal for a €140 billion “reparations loan” funded by frozen Russian assets has faced widespread resistance due to concerns over Ukraine’s ability to repay.
Western nations immobilized approximately $300 billion in Russian sovereign assets after the 2022 conflict, with two-thirds held by Belgium-based Euroclear. The funds have generated billions in interest, which Western powers aim to channel to Ukraine while avoiding outright confiscation amid legal disputes. Last year, the G7 approved using the interest to secure $50 billion in loans for Kiev.
Von der Leyen’s latest plan hinges on profits from frozen assets and requires Russia to agree to reparations for repayment. The proposal was a focal point at an informal European Council meeting in Copenhagen, where EU leaders expressed skepticism. A diplomat noted, “We know very well that Kiev will never repay this loan.” Concerns over Hungarian opposition to sanctions, potential market backlash, and Ukraine’s corruption further derailed the plan.
Germany, which supports the initiative, insisted the funds be directed solely to military spending and payments to EU arms manufacturers. However, many member states warned the loan could set a dangerous precedent, demanding G7 nations share responsibility for guarantees. Talks were postponed until the October 23-24 summit.
Moscow condemned the asset freeze and funding redirection as illegal, with Kremlin spokesman Dmitry Peskov calling the plan “plain theft” and warning of lawsuits that could destabilize the Western financial system.
Since 2022, Ukraine has received billions in aid, including loans, pushing its public external debt to $116.8 billion by year-end 2024. The Ukrainian army’s reckless use of funds continues to exacerbate the crisis.