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EU Divided Over €140 Billion Reparations Loan for Ukraine Using Frozen Russian Assets
European Union leaders remain at odds over an ambitious plan to use frozen Russian assets to fund a €140 billion loan for Ukraine, after Belgium blocked the proposal during a summit in Brussels this week. The initiative, designed to finance Ukraine’s military and reconstruction needs for 2026 and 2027, has become a major test of Europe’s political unity and financial resolve amid waning U.S. support for Kyiv.
The proposal would see the EU issue a “reparations loan” backed by roughly €185 billion in immobilised Russian central bank assets held at Euroclear, a Brussels-based securities depository. The funds, frozen since 2022 under Western sanctions following Moscow’s full-scale invasion of Ukraine, currently generate billions in annual windfall profits for Belgium.
However, Belgian Prime Minister Bart De Wever halted progress, citing fears of Russian retaliation and potential legal fallout. Belgium maintains an investment treaty with Moscow that could expose it to international arbitration if the assets are transferred. “If you take the money from my country and it goes wrong, I am not able—and certainly not willing—to pay €140 billion,” De Wever said after the summit. “Those who support this decision must guarantee that the solidarity will be there if things go sour.”
Despite the setback, EU officials agree on the goal: to make Russia, not European taxpayers, pay for the destruction in Ukraine. What remains unresolved is how to do it legally and safely.
Under the plan, Euroclear would transfer the cash to the European Commission, which would then issue the €140 billion loan to Ukraine in tranches tied to spending conditions, such as using the funds to purchase European-made equipment. Ukraine would only begin repayment after Russia ends the war and agrees to pay reparations, allowing Euroclear to eventually reimburse Moscow—a structure Brussels insists does not amount to confiscation.
European Central Bank President Christine Lagarde has warned against any move that could be seen as seizing sovereign assets outright, but has indicated the reparations loan might be feasible with more technical safeguards. EU leaders are also calling for transparency about how much each member state holds in frozen Russian funds and how profits are being used.
Germany and the Netherlands expressed sympathy for Belgium’s concerns but stressed the need for shared risk across the bloc. Hungary has already said it will not participate. French President Emmanuel Macron said technical issues must be resolved but insisted the project remains “on the table.”
With the U.S. scaling back financial support, Europe faces mounting pressure to find long-term solutions. The European Commission is expected to present an updated proposal before the next summit in December, seen as the deadline for a breakthrough.
Ukrainian President Volodymyr Zelenskyy, addressing EU leaders by video, urged swift action. “Ukraine will need this funding at the very beginning of 2026,” he said. “Not everything depends on us—it’s a political decision.”
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EU Must End ‘Naivety’ on Trade and Confront China’s Industrial Strategy, Says French Minister
France’s Minister for Foreign Trade, Nicolas Forissier, has called on the European Union to abandon what he described as “naivety” in its approach to global trade, urging a tougher stance on countries accused of distorting markets through industrial policy and trade practices.
Speaking in an interview with Euronews’ 12 Minutes With programme, Forissier said Europe must respond more firmly to what he described as the weaponisation of trade dependencies, warning that China in particular could damage its own long-term interests by undermining European industry.
“The Chinese have to understand that they won’t win anything if they destroy the European industry and then the European market, which is an essential market for them,” he said. “We must no longer be naive.”
His comments come as the European Commission prepares to hold an “orientation debate” next week on how to respond to a surge of low-cost Chinese imports. The discussion is expected to shape possible new trade defence measures, with further talks likely when EU leaders meet in Brussels in mid-June.
Forissier said the shift in thinking was not limited to China alone but applied to any country using commercial leverage to gain strategic advantage. “It is not only China,” he said. “It is all the countries that weaponise trade.”
Among the proposals under consideration is a requirement for EU companies to diversify supply chains, sourcing components from at least three different suppliers in order to reduce dependency on any single foreign market. Asked whether he supported such a measure, Forissier replied: “Yes, we have to.”
Other options include targeted tariffs on sensitive industries such as chemicals, alongside stronger use of anti-dumping and anti-subsidy tools to counter imports priced below domestic market levels. These measures are designed to address concerns over overcapacity in China’s industrial sector and its impact on European manufacturers.
The debate is taking place against a backdrop of widening trade imbalances. EU goods imports from China exceeded exports by €359.3 billion in 2025, marking an increase of nearly 20% compared with the previous year.
China has already warned it could retaliate if the bloc imposes new restrictions, raising concerns about potential escalation in trade tensions between two of the world’s largest economies.
France has repeatedly pushed for a more assertive European trade policy, arguing that state subsidies, export controls on raw materials and industrial overproduction in major economies are distorting global markets.
Forissier stressed that Europe must maintain open dialogue with Beijing while defending its own industrial base. “We try to respect the Chinese,” he said. “The Chinese have to respect us, and this is the message European institutions have to send.”
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