EU executive floats idea of reparations loan for Ukraine, based on frozen Russian assets

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STRASBOURG, France (Reuters) -The European Union should find a new way to finance Ukraine’s defence against Russia using the cash balances associated with Russian assets frozen in Europe, the head of the European Commission Ursula von der Leyen said on Wednesday.

She said the capital of the assets themselves would not be touched and the risk associated with the new financing would have to be shared collectively by EU countries.

“This is Russia’s war. And it is Russia that should pay. This is why we need to work urgently on a new solution to finance Ukraine’s war effort on the basis of the immobilised Russian assets,” von der Leyen said in a speech.

“With the cash balances associated to these Russian assets, we can provide Ukraine with a Reparations Loan. The assets themselves will not be touched. And the risk will have to be carried collectively,” she told the European Parliament.

She did not mention any amounts. The G7 countries have already agreed on support of $50 billion to Ukraine that will be paid back from the windfall profits generated by the roughly $300 billion in Russian assets frozen in G7 countries.

Von der Leyen gave no more detail on how the reparations loan would be constructed but said Ukraine would only pay it back once Russia pays for war reparations but Kyiv would receive the money already now.

(Reporting by Jan Strupczewski; Editing by Benoit Van Overstraeten)