EU Utilizes Frozen Russian Assets for Ukraine Aid

The European Union plans to use up to €185 billion of frozen Russian sovereign assets to finance Ukraine's defense and reconstruction. The funds would be available through a 'Reparations Loan' that Ukraine will repay after receiving reparations from Russia in a future peace settlement.

The European Union is exploring a financial mechanism to support Ukraine amid its ongoing conflict with Russia. By utilizing the dormant €185 billion in frozen Russian central bank assets, the EU aims to aid Ukraine without violating international law on sovereign asset confiscation.

These assets, invested in Euroclear, would be transitioned into zero-coupon bonds issued by the European Commission. This setup would allow the EU to offer Ukraine a 'Reparations Loan', repayable only once Ukraine receives war reparations from Russia. This structure enables immediate utilization of funds.

Challenges remain, including legal assurances needed, especially from member states such as Belgium, and Russia's strong opposition, which labels the plan as an unlawful seizure of its properties. However, the EU is determined to proceed, despite potential geopolitical repercussions.

(With inputs from agencies.)