The European Union is considering a new approach to financing support for Ukraine, which involves distributing financial guarantees among all member states to provide a large loan. The source of collateral for this loan will be frozen assets of the Russian Federation, and the amount of guarantees could reach €210 billion. The largest burden will fall on Germany, which, according to existing calculations, is expected to cover up to €52 billion.
This is reported by Finway
Details of Guarantee Distribution and Belgium’s Position
The European Commission has already presented detailed financial calculations to diplomats from EU countries following the proposal to provide Ukraine with €165 billion in the form of a reparations loan, based on the value of frozen Russian assets. To ensure support for this initiative, guarantees must be distributed among all EU countries. This is intended to convince Belgian Prime Minister Bart De Wever, who has expressed concerns about Belgium’s potential liability, given that the Euroclear depository is located in the country. He emphasizes the risks that may arise if funds need to be returned to Russia.
Currently, approximately €185 billion of blocked Russian assets are held in Euroclear accounts, with an additional €25 billion placed in private banks across the EU. If some countries, such as Hungary, refuse to participate in the scheme, the financial obligations of other states may increase. There was also consideration of involving countries outside the EU in the guarantees; however, according to Norway’s Finance Minister Jens Stoltenberg, Norway will not participate.
Loan Mechanism, Control, and Targeted Use of Funds
In 2025, Ukraine may face a budget deficit of €71.7 billion. If new financial assistance does not arrive in time, the government will have to cut public spending as early as April. Since Hungary has blocked the adoption of new joint EU debt to support Ukraine, European leadership is trying to persuade Belgium to agree to the use of frozen Russian assets to minimize the burden on the national budgets of member states.
“German Chancellor Friedrich Merz arrived in Brussels to personally assure the head of the Belgian government that Germany is ready to take on a quarter of all guarantees — more than any other EU country. According to Merz, the negotiations were constructive, and Belgium’s concerns should be addressed in a way that evenly distributes risks among all union members.”
The proposed loan mechanism includes funding for the Ukrainian defense industry of €115 billion over five years, allocating €50 billion to cover the budget deficit, and using the remaining €45 billion to repay the G7 loan received by Ukraine last year. The disbursement of funds is planned to occur in six tranches over the year.
The financing scheme includes a number of control measures: contracts and expenditure plans must be approved by the European Commission, which will also regularly inform about Ukraine’s financial needs and the sources of support received. This will allow EU countries to track the movement of funds and ensure transparency in the use of aid.