The European Union is about to use the cash value of €140 billion worth of frozen Russian state assets to finance a mega loan to Ukraine. But the European Commission still wants more, according to a document obtained by POLITICO.

The bulk of the frozen assets sit in a Belgium-based financial depository called Euroclear. But an additional €25 billion lies in private bank accounts across the bloc, and the EU executive wants to discuss using those funds to issue loans to Kyiv as well.

“It should be considered whether the Reparations Loan initiative could be extended to other immobilised assets within the EU,” reads the document, which the Commission circulated to EU capitals ahead of a Friday ambassadorial meeting on the topic.

“The legal feasibility of extending the Reparations Loan approach towards such assets has not been assessed in detail,” the document continued. “Such an assessment would need to take place before taking a decision on further steps.”

The document outlines the “design principles” for the Ukraine Reparations Loan initiative that will be up for debate ahead of next week’s EU summit in Brussels.

EU leaders are expected to have a broad discussion on the initiative and to call on the Commission to present a proposal for the loan. EU officials expect the bill to arrive quickly, and to serve as a platform for further talks on the financial engineering needed to make it work.

Finance ministers will discuss the bill when they next meet in November.

Guarantees and spending targets

Other design principles include national guarantees for the loan, a key demand from Belgium, which fears Moscow could send an army of lawyers its way to retrieve the sanctioned cash.

“A solid guarantee and liquidity structure should be put in place to ensure that the EU can always honour its obligations to Euroclear,” the document continued. “For that purpose, it is suggested to build a system of bilateral guarantees from Member States to the Union.”

These guarantees would ensure “access to the required liquidity when needed to satisfy any guarantee call,” i.e. to enable an immediate payout.

The EU’s next seven-year budget from 2028 would take over the national guarantees “with an adequate cover under the headroom,” a financial cushion that ensures Brussels can meet its obligations.

Once the loan is issued, the money would go toward “the development of Ukraine’s defence technological and industrial base and its integration into the European defence industry,” as well as to support the country’s national budget, “subject to appropriate conditionality.”