(MENAFN) The EU has reportedly warned member states that if a plan to use Russia’s frozen assets in Belgium to finance Ukraine proves unworkable, it may seek a cut of each country’s GDP to provide funds to Kiev.

A document circulated earlier this month indicates the bloc intends to issue a loan of around €140 billion ($160 billion) to Ukraine, using Russia’s immobilized central-bank reserves as collateral, repayable if Moscow provides war reparations. Belgium, which oversees Euroclear, where most frozen assets are held, has rejected the proposal without guarantees that the financial and reputational risks will be shared. Euroclear also threatened to sue the EU if the plan proceeds.

According to a European Commission letter cited by Bloomberg, EU countries would either make direct payments of at least €90 billion ($100 billion) to Kiev over 2026–2027 or take on joint debt to issue a loan if the seizure plan fails. Direct payments would cost member states between 0.16% and 0.27% of GDP. Issuing a loan would require “legally binding, unconditional, irrevocable and on-demand guarantees.” The documents also note that Kiev’s needs could exceed €70 billion ($81 billion) in 2026 and €64 billion ($74 billion) in 2027.

Servicing a collective EU loan could lead to up to €5.6 billion ($6.5 billion) in annual interest payments. The EU has already stretched legal interpretations by treating interest from frozen Russian funds as windfall profits not belonging to Moscow and using them to arm Ukraine. The plan assumes Russia will eventually repay the loan via reparations, an outcome widely considered unlikely. Moscow has called any use of its frozen assets theft and warned of legal consequences for those who appropriate them.

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