EU Drafts Reparations Plan for Ukraine Using Frozen Russian Assets

EU leaders draft a proposal to create a reparations loan for Ukraine, leveraging Russia's frozen assets. The plan, which awaits approval, seeks to support Ukraine's defense industries by 2026, ensuring compliance with investment treaties and asset holder obligations. The proposal's current status remains tentative.

In a draft document that has surfaced, EU leaders are considering the establishment of a reparations loan to aid Ukraine by utilizing Russia's frozen assets. This proposed financial mechanism, still subject to change, aims to back Ukraine's defense requirements while ensuring compliance with existing investment agreements.

The draft document specifies that the funds, expected to be available from the second quarter of 2026, must meet several conditions. These include respecting asset holders' contractual commitments, ensuring equal treatment, and adhering to bilateral investment treaties. Emphasis is placed on supporting both EU and Ukrainian defense sectors.

Although the document currently includes the loan proposal in brackets, indicating the tentative nature of the discussions, the urgency for EU institutions to adopt necessary instruments reflects the mounting pressure to solidify the plan aimed at aiding Ukraine's defense amid ongoing geopolitical tensions.

(With inputs from agencies.)