The European Union is advancing a major initiative to financially support Ukraine for the next two years by leveraging frozen Russian assets. EU leaders are discussing a "reparations loan" plan to offer Ukraine a loan of around €140 billion (approximately $163 billion) using Russian state assets frozen in European financial institutions, particularly €185 billion held in Euroclear, Belgium. Ukraine would not need to repay this loan until Russia compensates for war damages, effectively using the frozen assets as collateral without directly confiscating them. This move aims to address the growing financial demands of Ukraine while U.S. aid diminishes. The plan, still under legal scrutiny and political debate especially due to concerns from Belgium, would allow sustained EU funding for Ukraine's defense and reconstruction through 2026 and 2027. The EU has already been channeling interest (around €3 billion annually) accrued from these frozen assets to Ukraine's defense, and this initiative would significantly expand that support by formalizing the use of these holdings in loan form. However, there are risks, including potential Russian retaliation and legal challenges, which are being addressed by EU leaders as they seek consensus on this unprecedented financial mechanism .
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