European leaders, including those in the UK, are increasingly confident that a proposal to lend Ukraine €140bn (£122bn) secured against frozen Russian central bank deposits can be agreed by the end of the year. The move is deemed critical for Kyiv to maintain its defence effort against the Russian invasion.
Under the plan, sketched out by the European Commission last month, the EU would provide an interest-free loan to Ukraine based on Russian assets frozen at the Euroclear finance agency in Brussels. The loan would be made on the basis that Russia would use the frozen assets to cover war reparations when the conflict ends. A senior EU official emphasised that the proposal is not confiscation.
Radosław Sikorski, Poland’s foreign minister, said he believed the issue was heading towards a happy resolution, adding that an agreement was achievable by the end of the year. “It’s very simple, either we use the aggressor’s money or we will have to use our own money,” he said.
Part of the scheme involves G7 countries clubbing together to underwrite the debts, principally to reassure Belgium, which hosts €183bn of frozen assets at Euroclear. The UK is expected to contribute to this aspect despite holding few frozen Russian assets directly. US participation remains uncertain, but the US holds only about $7bn in Russian bank assets.
A UK government spokesperson said the G7 agrees on the need to pressure Russia and explore new ways of financing Ukraine’s war effort through utilising the value of Russian sovereign assets. The UK is only considering options in line with international law and that are economically and financially responsible.
EU leaders are expected to call on Thursday for a detailed proposal on using the assets, in line with international law and underpinned by appropriate European solidarity and risk-sharing. The plan relies on the assets remaining frozen solid.
