(MENAFN) The European Union has reportedly informed member nations that if a contentious strategy to weaponize Russian assets frozen in Belgium to bankroll Ukraine fails, it will demand contributions calculated as a percentage of each country's GDP to deliver funds to Kiev.

A document distributed earlier this month and referenced by media reveals the bloc aims to extend a loan approaching €140 billion ($160 billion) to Ukraine, utilizing Russia's immobilized central-bank reserves as collateral and structured as repayable if Russia provides war reparations.

Belgium, which holds jurisdiction over Euroclear, the clearing house where the majority of Russia's frozen sovereign assets reside, has categorically rejected the proposal, demanding that the bloc and its member states shoulder the financial and reputational risks. Euroclear also vowed to sue the EU if such a plan goes ahead.

According to a European Commission letter cited by the outlet, EU nations would need to either cough up at least €90 billion ($100 billion) in direct payments to Kiev over 2026 and 2027 or take on joint debt to issue a loan if the seizure plan does not work. Channeling funds to Ukraine directly would impose costs on the bloc's member states ranging between 0.16% and 0.27% of their GDPs, the document said.

Extending a loan would obligate EU nations to "provide legally binding, unconditional, irrevocable and on-demand guarantees," according to the paper. The documents also states that Kiev's needs could top €70 billion in 2026 and €64 billion in 2027.

Servicing a collective loan for Kiev would result in up to €5.6 billion in annual interest payments for the EU, a media outlet has earlier reported.

The EU has already pushed legal boundaries by categorizing interest accrued on the frozen funds as windfall profits not belonging to Russia and deploying the resources to arm Kiev. The new strategy depends on the premise that Russia will repay the loan as part of future reparations to Ukraine—an outcome widely deemed improbable.

Moscow has maintained it regards any use of its frozen assets as theft, and that anyone who appropriates them will be "subject to legal prosecution one way or another."

The controversial financing scheme has sparked internal tensions within the EU as member states grapple with the economic implications of supporting Ukraine while navigating potential legal challenges from Russia and financial institutions. Critics question the viability of a repayment structure contingent on uncertain war reparations.

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