BRUSSELS ― European Commission President Ursula von der Leyen proposed using Russian frozen assets to issue a “reparations loan” for Ukraine during a major speech in Strasbourg.

With Ukraine facing an estimated €8 billion budget shortfall in 2026, von der Leyen suggested funneling major new funding to sustain the war-torn country in the years to come.

The idea is to use the “cash balances” associated to the assets to underpin a fresh loan to Ukraine. Von der Leyen did not provide more details on how that would work.

“Ukraine will only pay back the loan once Russia pays for the reparations. The money will help Ukraine already today,” von der Leyen told the European Parliament during her annual State of the Union Speech.

She added that the loan “will also be crucial in the mid- and long-term for Ukraine’s security.
For example, funding for strong Ukrainian armed forces as the first line of security
guarantees.”

Crucially, this option would fall short of immediately confiscating the assets, which a majority of EU countries oppose due to financial and legal concerns.

However, several European countries have previously discarded the idea of a “reparations loan” over fears that this is a breach of international law. Belgium is particularly alert to such concerns because it hosts Euroclear, the financial firm that hold the Russian immobilized assets.

Von der Leyen’s idea is not entirely new.

In 2024, G7 countries including the European Commission agreed to funnel a total of €45 billion in profits generated by investing the assets to Ukraine.

Nevertheless, the EU’s €18 billion share of the loan will be entirely paid out by the end of the year ― prompting calls to generate additional revenues within a short timeframe.

In order to and amp up pressure on Russia, Brussels started testing the appetite of national capitals for moving the assets into riskier investments that could generate more profits for Ukraine, as POLITICO first reported.