EU's Strategic Use of Frozen Russian Assets for Ukraine Aid

The European Union is devising a plan to finance Ukraine's defense and reconstruction efforts by utilizing immobilised Russian central bank assets. This strategy aims to navigate the complex legal framework without confiscating the assets, a stance supported by the European Central Bank and various EU member states.

The plan involves issuing a Reparations Loan to Ukraine, backed by cash balances from maturing securities immobilised since Moscow's 2022 invasion. Ukraine would repay the loan only upon receiving war reparations from Russia, effectively allowing immediate access to funds needed amid ongoing conflicts.

With an initial focus on addressing Ukraine's projected $130 billion financing gaps by 2027, the scheme requires collaborative risk sharing among European and G7 countries. While some EU states may opt out, the overarching goal is to maintain solidarity without compromising on legal and financial safeguards.

(With inputs from agencies.)