Brussels prepares proposal to use frozen Russian assets for Ukraine

According to Reuters sources, the European Commission is preparing a legal proposal to allow Ukraine to be financed from the proceeds of frozen Russian assets, while leaving open the possibility of borrowing on financial markets or a combination of both.

EU leaders agreed in October to cover Ukraine's financing needs for the next two years, but have not yet given the green light to a plan to use about 140 billion euros of Russian state assets in Europe as a loan to Kiev. Belgium, which manages most of these funds in the Euroclear depository, has long warned of legal risks.

Under the forthcoming proposal, Ukraine would only repay the loan if Russia pays reparations for damage caused by the war. The Commission plans to adopt the proposal on Wednesday at a regular meeting of EU commissioners, with the text highlighting a preference for a "reparations loan" model linked to the cash balances of the Russian central bank's frozen assets.

The legislation will leave open the possibility to finance aid also in a classic form, where the EU borrows on the markets and allows for switching between the different mechanisms. .

(reuters, sie)