Ukraine could get 300 billion dollars in reparations from Russia, Reuters reports

The idea of a reparations loan

As noted in a Reuters commentary by Hugo Dixon, since Russia started the war in Ukraine in 2022, Western politicians have debated how to use frozen Russian assets. The European Commission has supported the concept of a reparations loan proposed by international experts.

The mechanism is based on the principle that Russia must pay for the damages. Ukraine would repay the loan only if Moscow pays reparations. If Russia refuses, the loan would be written off.

Assets and political disagreements

After the war began, the G7 countries froze about 300 billion dollars of the Russian Central Bank's assets. Most of these are held in Belgium.

The idea of full confiscation faced resistance from Germany, France, and Belgium. Therefore, a reparations loan is considered a more legally viable alternative.

The SPV mechanism

One option involves transferring Russian assets to a special-purpose vehicle (SPV). It could issue a loan to Ukraine on the condition that repayment would occur only if Moscow pays reparations.

At the same time, the legal ownership of the assets would remain with Russia. This approach is not considered confiscation, only a change of custodian.

The bond alternative

Another mechanism involves buying long-term EU bonds with a zero interest rate using Russian assets. The European Union could then provide a loan to Ukraine.

However, this option is more complicated and could place a burden on EU members if Moscow does not pay compensation. That is why the SPV option appears simpler and safer.

Urgency of decision-making

Ukraine could face a financing shortfall as early as the beginning of next year. The United States has almost completely stopped aid, and Kyiv needs swift decisions.

Experts emphasize that the sooner a reparations loan mechanism is established, the stronger Ukraine’s position will be in negotiations with Russia.

Allies’ participation

About 210 billion euros of Russian assets are frozen in the EU, with another 75 billion held outside the bloc. The initiative could be joined by the United Kingdom, Canada, and Japan.

Canada, as the G7 chair, is ready to raise the idea for discussion with partners. The United States holds only 5 billion dollars in Russian assets, but its support would add political weight.

The role of the European Union

According to the outlet, the EU wants to strengthen its position in negotiations to end the war. A reparations loan could serve as a tool for this and provide Kyiv with financial stability.

If the decision is implemented soon, the European Union will gain a key role in resolving the conflict.

Earlier, the Financial Times reported that the EU is preparing a scheme of reparations loans for Ukraine totaling 170 billion euros, based on frozen Russian assets in Euroclear.

The Cabinet of Ministers of Ukraine forecasts covering the 2026 state budget deficit with 44 billion dollars of international aid. Sources for 18 billion dollars of this amount have not yet been identified.

According to First Deputy Head of the National Bank of Ukraine Sergiy Nikolaychuk, the most likely source in 2026 will be funds from European partners.