This study was requested by the heads of state and government of the EU at the summit on October 23, after Belgium rejected the option preferred by the majority: a ‘reparations loan’ to kyiv of 140 billion of euros from the funds of the Central Bank of Russia frozen in Euroclear, based in Brussels.
The Belgian Prime Minister, Bart de Weverassures that this plan amounts to a confiscation of Russian funds and fears that the Kremlin’s retaliation will be concentrated solely on his country. That is why it has demanded solid commitments from the rest of the partners to jointly cover all the risks associated with this initiative.
De Wever met last Friday with Von der Leyen herself at the headquarters of the Community Executive, but at the moment she continues to consider the guarantees offered by the Community Executive to be insufficient.
In its alternatives document, Brussels first estimates kyiv’s financing needs for 2026-2027 at €135.7 billion: 52.3 billion in budget support and 83.4 billion in military aid.
After examining the three options it considers viable, the Commission further concludes that the ‘reparations loan’ is the only solution that would not entail significant additional (probably unaffordable) costs for the Member States.
“The benefit of this option is that does not generate a significant additional fiscal cost for Member States“, explained the Commissioner for Economic Affairs, Valdis Dombrovskisin an interview with EL ESPAÑOL and other European newspapers.
“Obviously, there are other alternatives that involve using the EU budget or direct support from Member States, but these entail higher fiscal costs for governments,” he added.
The first option proposed by Brussels is for Member States to provide voluntary bilateral contributions (i.e. non-refundable grants) to Ukraine through the EU.
This alternative does not imply new joint responsibilities nor does it require additional guarantees or compensation, but it immediately impacts the budgets of the Member States. Specifically, the Community Executive estimates that this impact would range between 0.16% and 0.27% of GDP per year.
The second alternative would involve a new joint European debt issue to finance aid to Ukraine. To do this, Member States should provide legally binding, unconditional, irrevocable and upon request guaranteesdistributed among them according to the GDP key.
This guarantee could be assumed later by the available margin of the EU budget, although this would require the unanimous support of the 27 member states, something highly unlikely due to Hungary’s veto.
In this scenario, Member States would also have to bear the cost of interest, while national guarantees will have an impact on the deficit and debt. The Nordic countries, which are among those most supportive of kyiv at the moment, are radically opposed to any Eurobond issuance.
Finally, the favorite option of Brussels and the majority of Member States is the ‘reparations loan’ of 140 billion euros, which would be financed with cash from frozen Russian funds.
Ukraine would only repay this loan when it receives Russian reparations for the damage caused. This option does not require the Union to undertake any direct borrowing in capital markets.
Of course, Member States should also provide guarantees based on their GDP to cover the entire credit, although in this case they would not count towards the national debt.
The Community Executive warns that the risks derived from the bilateral investment treaty that Belgium has with Russia would also have to be covered, as well as the costs and financial consequences derived from arbitration awards or other judicial decisions or processes against a Member State.
“Since this option would be a solution innovative from a financial and legal point of viewit cannot be ruled out that there are indirect effects potential, included in the financial markets (…) if the reparations loan is incorrectly perceived by others as a confiscation,” says Brussels.
This risk could be reduced if other international partners, such as Canada or the United Kingdom, take similar measures and provide loans to Ukraine from frozen Russian assets.
In her letter, Von der Leyen calls on the Member States to close an agreement at the next summit on December 18 and 19. To stay afloat, Volodymyr Zelensky’s government needs money to start flowing by the beginning of the second quarter of 2026 at the latest.