Ukraine has reached an agreement with the International Monetary Fund on financing worth $8.2 billion for the next four years. Meanwhile, the European Union continues to delay a decision on granting Ukraine a reparations loan, despite the country's clear need for financial support.
In a detailed discussion with economic expert Ilya Neshodovsky, the complexities of using Russia’s frozen assets were explored. While seizing and transferring these assets to Ukraine seems logical, the EU fears risks to European financial stability. As a result, complex mechanisms are devised, such as issuing special bonds backed by these assets.
Belgium and several other countries have objected, citing political risks, since decisions on asset freezes require unanimous approval from all EU states. Delays are also caused by concerns that if the political situation within the EU changes, Russia could demand its assets back—a demand that cannot be fulfilled in practice.
The situation was further complicated when European officials saw a draft US-Russia peace proposal, which outlined that most frozen assets would go into US-Ukraine and US-Russia funds, with Europe expected to provide an additional $100 billion for Ukraine’s reconstruction. This raised concern among EU members about losing control over the money and being left to bear the cost.
Amid uncertainty, the EU agreed to provide Ukraine with loans backed by the frozen Russian assets. The only clear legal mechanism is the G7’s decision to freeze these assets until Russia pays reparations or the war ends. However, this funding is expected to cover only Ukraine’s needs through the first quarter of 2026, and no comprehensive resolution on reparations has yet been reached.
