European Union leaders are contemplating a “reparations plan” that may use frozen Russian state assets to supply Ukraine with a $164bn mortgage to assist fund its reconstruction after the war with Russia ends.
Leaders expressed a mix of assist and warning for the plan on Wednesday as they met within the Danish capital, Copenhagen, days after drones were spotted in Denmark’s airspace, prompting airport closures. Whereas the drones in Denmark weren’t formally recognized as Russian, different European international locations, together with Poland, Romania and Estonia, have accused Russia of drone incursions into their airspace in September.
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“I strongly assist the thought,” Danish Prime Minister Mette Frederiksen stated. Swedish Prime Minister Ulf Kristersson additionally stated he was “very a lot in favour” of the plan. Others stated there might be authorized issues, nonetheless.
Here’s what we learn about Europe’s “reparations plan”, the way it may match and what the response from Russia is more likely to be.
What’s Europe’s ‘reparations plan’?
The reparations plan was first outlined by European Fee President Ursula von der Leyen in mid-September, and backing for it has grown as United States financial support for Ukraine wanes.
Throughout his 2024 presidential marketing campaign, US President Donald Trump promised voters he would pull the US again from offering excessive ranges of economic and army support to Ukraine.
Because the starting of his time period in January, Trump has made it clear the US will take a again seat when it comes to offering monetary assist and safety ensures to Ukraine, indicating Europe ought to fill the hole as a substitute.
Europe’s plan would use Russian belongings frozen in European banks as collateral for a 140-billion-euro ($164.4bn) loan to Ukraine. Repayments for the mortgage could be recouped by way of conflict reparations from Russia, however the mortgage would even be assured both within the EU’s subsequent long-term finances or by particular person EU member states.
“We want a extra structural answer for army assist,” von der Leyen stated on Tuesday. “This is the reason I’ve put ahead the thought of a reparations mortgage that’s based mostly on the immobilised Russian belongings.”
How a lot in frozen Russian belongings does Europe maintain?
About $300bn in Russian Central Financial institution belongings have been frozen by the US and European international locations since Russia’s invasion of Ukraine in February 2022.
Most of this – $246.9bn – is held in Europe, of which $217.5bn – the overwhelming majority in money – is held by Euroclear, a Belgium-based capital markets firm.
On June 30, Euroclear reported the Russian sanctioned belongings on its steadiness sheet generated $3.2bn in curiosity through the first half of 2025, a drop from the $4bn in curiosity earned over the identical interval final 12 months.
What are the challenges to this plan?
Beneath worldwide legislation, a sovereign nation’s belongings can’t merely be confiscated. Therefore, loaning this cash to Ukraine could be an infringement of Moscow’s sovereign declare over its central financial institution belongings.
Since many of the belongings are held in Belgium, the nation has requested for the plan to be fleshed out in case it’s required to return the belongings to Russia.
“I defined to my colleagues yesterday that I would like their signature saying, ‘If we take Putin’s cash, we use it, we’re all going to be accountable if it goes unsuitable,’” Belgian Prime Minister Bart De Wever instructed reporters in Copenhagen on Thursday.
On Wednesday, von der Leyen stated: “It’s completely clear that Belgium can’t be the one who’s the one member state that’s carrying the chance. The chance must be placed on broader shoulders.”
Are any European leaders hesitant about this plan?
Sure. In addition to De Wever, different European leaders have expressed hesitation or have requested their fellow leaders to work out extra particulars of the plan earlier than they comply with it.
Dutch Prime Minister Dick Schoof stated the proposal must be thought-about very rigorously, given the authorized and monetary dangers that would come up.
Others additionally signalled warning. “I feel that’s a tough authorized query,” Luxembourg Prime Minister Luc Frieden instructed reporters. “You may’t simply take over belongings that belong to a different state so simply.”
Frieden added: “There at the moment are different proposals on the desk, however these additionally elevate an entire host of questions. I wish to have solutions to those questions first. Amongst different issues, how would such a mortgage be repaid? What would occur if Russia didn’t repay these reparations in a peace treaty?”
Is the plan more likely to go forward?
Specialists stated European leaders would doubtless should discover a approach to make the plan viable because the prospects of additional US support for Ukraine dry up.
“It’s going to occur as a result of with the US strolling away, Europe is left with $100bn-plus annual funding wants for Ukraine,” Timothy Ash, an affiliate fellow within the Russia and Eurasia programme at Chatham Home, instructed Al Jazeera.
Ash defined that the larger problem for Europe could be to not go forward with the plan if it means leaving Ukraine underfunded typically and putting it at greater danger of dropping the conflict with Russia. “Dangers to Europe would then be catastrophic,” he stated, together with the prospect of tens of hundreds of thousands of Ukrainians migrating west into Europe.
If a Ukrainian loss within the conflict turns into extra doubtless, European nations could be pressured to ramp up defence spending to five p.c of their gross home merchandise (GDPs) a lot quicker than anticipated.
In June, members of NATO pledged to extend their defence spending to five p.c of their GDPs by 2035.
Such an acceleration “would imply greater finances deficits, greater borrowing prices, extra debt, much less development and a weaker Europe and euro”, Ash stated.
How has Russia responded?
Moscow has rebuked the EU plan, calling it a “theft” of Russian cash.
“We’re speaking about plans for the unlawful seizure of Russian property. In Russia, we name that merely theft,” Kremlin spokesman Dmitry Peskov instructed reporters on Wednesday.
Peskov stated anybody concerned in seizing Russian belongings “can be prosecuted in a method or one other. They may all be known as to account.”
He added: “The boomerang will very critically hit those that are the principle depositories, international locations which are fascinated by funding attractiveness.”
Ash stated Russia might take authorized motion towards European international locations if the plan goes forward. Nevertheless, “it must elevate its personal sovereign immunity to have the ability to launch any such authorized motion. And a authorized motion by Russia would take years – a long time to conclude.”
Russia is protected by sovereign immunity, which is a authorized precept shielding overseas governments from being sued in courts exterior their very own nation. If Russia needs to legally pursue this, it could must waive this immunity, which, in flip, would imply Russia is also sued or tried in another country.
Ash added that one other plan of action Russia might take could be to grab Western belongings underneath its jurisdiction, however this additionally doesn’t come with out challenges. “Russia has 10 instances extra belongings within the West than vice versa,” Ash stated. “It’s simply extra susceptible by means of this channel.”
How a lot in Western belongings does Russia maintain?
Moscow stated the worth of all overseas belongings it holds is corresponding to the frozen Russian reserves held within the West. Citing information from January 2022, Russia’s state-run RIA information company reported there have been about $288bn of belongings in Russia that would probably be seized by Moscow.
Nevertheless, Russian Central Financial institution data from 2022 present there have been $289bn in “spinoff and different overseas investments” in Russia. By the top of 2023, these overseas belongings had dropped in worth to $215bn.
Ash defined: “These belongings are all overseas belongings – not simply Western. [They include] Chinese language, Indian, Center East belongings. And most of these belongings are personal – not state.”
