Europe develops a financial mechanism for Ukraine worth 130 billion euros

Brussels is working on a financial mechanism to support Ukraine, which involves a loan provided from Russian assets frozen following the hostilities.

The European Union is considering providing Ukraine with a loan of up to 130 billion euros for repairs. The final amount will be determined after the International Monetary Fund estimates the country’s financial needs in 2026-2027, Reuters reports.

The idea of implementing this loan was voiced on September 10 by the President of the European Commission, Ursula von der Leyen, who proposed using frozen Russian assets. This loan is intended to cover Ukraine’s military expenditures, and its repayment will only begin after Ukraine receives reparations from Russia as part of the peace talks. The risks associated with the loan are planned to be distributed among EU countries and likely G7 countries.

Approximately 210 billion euros of Russian assets are held in Europe, with the majority located in the Euroclear Depository in Belgium. Officials say that $ 175 billion has already been transformed into cash, serving as the basis for a new credit mechanism.

However, before granting a repair credit to Ukraine, the EU intended to fulfill its previous G7 commitment of € 45 billion, agreed upon last year. Three officials estimate that approximately 130 billion euros will remain, which can be used for a new tool.

The EU Commissioner for Economic Affairs, Valdis Dombrovskis, noted that the decision on the loan amount will be made only after the IMF’s findings are received. According to European financial officials, the approval of the details is currently underway. Brussels develops a special mechanism for the use of frozen assets without confiscation, which is an essential issue for many EU governments and the European Central Bank.

Funds can be transferred to a special structure, and the European Commission will release bonds with a zero coupon under the guarantees of EU governments and possibly the G7.

At the 80th session of the UN General Assembly, Ursula von der Leyen noted that the EU will allocate approximately 200 million euros for school lunches for Ukrainian children.