Ukraine could receive $300 billion without confiscating Russian funds - Reuters
The defense and budget deficit loan will be repaid only if Russia pays for the damages caused. If Moscow refuses, the loan will be written off.
As Censor.NET informs, Reuters reports.
After the war, the G7 countries froze about $300 billion in assets of the Central Bank of the Russian Federation, mainly in Belgium. The idea of complete confiscation met with resistance from Germany, France, and Belgium, so a reparation loan is considered a legal alternative.
As Reuters columnist Hugo Dixon notes, since the beginning of Russia's invasion of Ukraine in 2022, the West has been looking for ways to use Russia's frozen assets. The European Commission supported the concept of the so-called reparation loan: Ukraine will return the loan only if Moscow pays reparations. If the Russian Federation refuses, the loan will be written off.
Disbursement mechanisms
One option involves transferring Russian assets to a special SPV structure that will issue a loan to Ukraine. Legally, the assets remain the property of Russia, which is not considered confiscation.
Another mechanism is the purchase of Russian assets through long-term EU bonds with a zero rate, from which a loan can be provided to Ukraine. This option is more complicated and may create a financial burden on EU countries if Moscow does not pay compensation.
"Ukraine may face a funding deficit as early as the beginning of next year. The US has almost stopped aid, so Kyiv needs quick solutions. Experts note that the sooner the reparations loan mechanism works, the stronger Ukraine's position will be in negotiations with Russia," the publication notes.
Allied participation
The EU has frozen about 210 billion euros of Russian assets, another 75 billion dollars outside the bloc. The UK, Canada, and Japan may join the initiative. Canada, as the G7 chair, is ready to raise the issue for discussion with partners, and US support will add political weight.
The EU seeks to strengthen its position in negotiations to end the war. A reparations loan could be a tool for this and provide Kyiv with financial stability. If the decision is implemented in the near future, the EU will have a key role in resolving the conflict.
