The proposed reparations loan for Ukraine is intended to demonstrate to Washington that Europe is taking credible steps to end Russia’s war, EU High Representative Kaja Kallas said on Monday, responding to warnings from Belgian Prime Minister Bart De Wever that the unprecedented proposal could undermine diplomatic efforts.
“Approving the reparations loan will strengthen Europe’s position vis-à-vis Moscow. That’s very clear. We need to move forward,” Kallas said after a meeting of EU defence ministers.
She emphasized that the loan sends a triple message:
- To Ukraine – that the EU stands ready to help defend the country.
- To Moscow – that Russia cannot outlast Europe’s resolve.
- To Washington – that Europe is taking decisive and credible action.
“Russia doesn’t want this reparations loan to happen, so our response should be exactly the opposite,” Kallas added.
The Loan Proposal
The scheme, presented by the European Commission, would channel frozen assets of the Russian Central Bank to Ukraine as a zero-interest line of credit. Kyiv would only repay the loan if Moscow agreed to compensate for war damages.
Roughly €185 billion in assets are held at Euroclear in Belgium, giving Brussels a pivotal vote in the debate. De Wever has strongly criticized the plan, describing it as “fundamentally wrong” and fraught with potential multi-billion euro losses at court. He warned that hasty approval could obstruct ongoing US-led efforts to broker peace.
Since the initial draft, the Commission has amended several controversial elements, including proposals to turn Russian assets into investment vehicles benefiting both Washington and Moscow.
Support and Resistance
Despite Belgian resistance, the proposal has broad support across the EU. Ministers from the Netherlands and Sweden highlighted the urgency of using Russian assets to pressure Moscow and support Ukraine, citing high European debt and low growth as limiting factors for bilateral contributions.
Kallas stressed that tapping Russian assets is the most viable option, avoiding burdens on national treasuries and holding Moscow accountable. She indicated that the EU could jointly shoulder Belgium’s concerns over legal and financial risks.
Belgium, as the host of Euroclear, remains a formidable gatekeeper. De Wever insists on written guarantees covering all potential losses before approving the loan.
Urgency and Alternatives
The EU faces an urgent need to finance Ukraine’s 2026 budget, with at least €45 billion required if the reparations loan fails. Emergency financial solutions are reportedly being considered, and legal texts for the loan could be released as early as this week.
Meanwhile, the IMF’s $8.1 billion program for Ukraine depends on firm EU commitments to maintain Kyiv’s macroeconomic stability.
French President Emmanuel Macron, after hosting Zelensky in Paris, acknowledged De Wever’s “legitimate concerns” and urged an adequate solution before the Christmas break.
While the reparations loan represents a bold strategy to use Russia’s own frozen assets, the Belgian veto underscores the limits of EU unity. Without Brussels’ consent, the initiative risks stalling, leaving Ukraine reliant on slower, less direct funding channels. Kallas’ insistence on moving forward highlights Europe’s growing willingness to challenge Moscow, but the political and legal complexities make the outcome uncertain.
