Germany floats new Ukraine loan backed by frozen Russian assets

A group of countries led by Germany is reviving the row over using frozen Russian assets to fund Ukraine, pitching a new loan for Kyiv supported by the assets.

Such a loan would replace at least some of the €100 billion planned for Ukraine in the EU’s upcoming long-term budget, in line with Berlin’s aim of cutting the budget, according to four EU diplomats and officials, granted anonymity to speak freely.

Some countries, including Sweden, Poland, the Netherlands and Spain, are pushing to use the €210 billion in Russian frozen assets to finance another Ukraine loan. 

However, Belgium, which hosts the bulk of the frozen funds, fears it would bear the brunt of any legal challenge by Russia and shot down a similar plan last year.

One of the diplomats said the new move is seen as preferable to slashing planned spending elsewhere.

“It confronts countries like Belgium with the question whether they want to finance Ukraine support via the [budget], meaning there may be less money for farmers and regions, or whether they free up many billions by using the Russian assets instead,” they said.