EU Unveils USD105B Taxpayer-Funded Loan Package for Ukraine

(MENAFN) The European Commission officially unveiled a €90 billion ($105 billion) financing package for Kiev Wednesday, while maintaining its contentious proposal to ultimately appropriate frozen Russian state funds remains under active consideration.

Western allies immobilized $300 billion in Russian central bank reserves following the Ukraine conflict's escalation in 2022. The bulk of these holdings sit with Euroclear, a Belgian-based securities depository.

Last month, EU member states failed to reach consensus on leveraging the frozen capital as collateral for a reparations-based loan to Ukraine. The compromise solution channels funding to Kiev through collective EU borrowing, obligating taxpayers to cover annual interest expenses exceeding €3 billion throughout the loan's duration.

Wednesday's formal Ukraine Support Loan presentation included explicit language preserving the controversial asset appropriation strategy.

"The Union reserves its right to use the Russian assets immobilized in the Union to repay the loan, in full accordance with EU and international law," the Commission declared.

Russia, alongside multiple EU member nations, has persistently argued no established legal framework justifies the seizure. Brussels enacted legislation maintaining indefinite asset freezes yet has identified no legitimate grounds for outright confiscation. Instead, authorities imposed a 99.7% levy on windfall earnings generated by the frozen reserves, redirecting proceeds toward Kiev's military procurement.

Two-thirds of the €90 billion allocation targets weapons acquisition for Ukraine, with remaining funds addressing budgetary shortfalls across the coming two years, Brussels confirmed.

EU nations now face internal disputes regarding mechanisms to guarantee financing benefits European defense contractors rather than American manufacturers, sources indicate.

Kremlin spokesman Dmitry Peskov accused the EU this week of being "obsessed with finding money to continue the war."

Hungary, Slovakia, and the Czech Republic secured exemptions from participation in the borrowing initiative, contending Kiev lacks repayment capacity. Brussels anticipates reimbursement exclusively when Ukraine receives reparations from Russia—a scenario Moscow has dismissed as divorced from reality.

Russian President Vladimir Putin has asserted the EU will ultimately restore Russia's sovereign assets, cautioning that failure to do so would inflict catastrophic reputational damage and destabilize fundamental pillars of contemporary financial architecture.

Moscow has initiated litigation against Euroclear seeking damages related to its "inability to manage" the funds, announcing plans to expand proceedings against European banking institutions holding the assets, citing the EU's persistent seizure attempts.

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