The European Union is discussing a mechanism under which each member state must provide financial guarantees for a large loan to Ukraine, backed by frozen Russian assets. The total volume of such guarantees could reach €210 billion. According to documents cited by POLITICO, the largest potential burden falls on Germany, which may have to cover up to €52 billion.
The European Commission presented these calculations to EU diplomats after proposing to allocate €165 billion to Ukraine in the form of a so-called reparations loan, based on the value of frozen Russian sovereign assets. Distributing guarantees among all EU countries is necessary to secure the approval of Belgian Prime Minister Bart De Wever, who opposes the use of Russian state assets due to concerns that Belgium — home to Euroclear — could become solely liable for paying Russia in the event of litigation or future claims.
Euroclear currently holds around €185 billion in Russian assets, with an additional €25 billion kept in private banks across the EU. Individual countries’ obligations could increase if some states, such as Hungary, refuse to participate in the scheme. Non-EU countries could theoretically take on part of the guarantees, but a key potential candidate — Norway — has already indicated through its finance minister, Jens Stoltenberg, that it is not interested.
Ukraine is projected to face a budget deficit of €71.7 billion next year and will be forced to cut public spending as early as April unless new assistance arrives. Hungary recently vetoed the issuance of new EU-wide debt to support Kyiv, prompting EU leaders to seek De Wever’s approval at the 18 December summit for using frozen Russian assets in order to avoid tapping national budgets.
On Friday evening, German Chancellor Friedrich Merz arrived in Brussels to personally assure the Belgian prime minister that Germany is prepared to assume one-quarter of all guarantees — more than any other EU member. Merz described the talks as constructive and stressed that Belgium’s concerns must be addressed in a way that ensures risks are shared evenly across the bloc.
The proposed loan would allocate €115 billion to Ukraine’s defense industry over five years, €50 billion to cover the budget deficit, and the remaining €45 billion to repay last year’s G7 loan. Funds would be disbursed in six tranches over the course of the year. The mechanism includes oversight provisions intended to prevent misuse: contracts and spending plans must be coordinated with the European Commission, which will also regularly outline Ukraine’s financial needs and report on the sources of Kyiv’s military and financial support so EU states can monitor the flow of funds.
