Washington believes the frozen funds should be used as leverage for a Ukraine peace deal rather than “prolong the war,” the agency reports
The US is lobbying several EU members to block a plan to use frozen Russian assets as collateral for a €140 billion loan to Ukraine, in hopes of using the funds as leverage for a potential peace deal, Bloomberg reported on Friday, citing sources.
Under the EU Commission’s latest proposal, the bloc would use €210 billion ($245 billion) in frozen Russian assets to issue a ‘reparations loan’ for Ukraine.
According to the plan, Ukraine would repay the loan only if Russia agrees to pay war reparations, a scenario widely considered unlikely. The plan has met strong resistance from several EU members – particularly Belgium, which hosts most of the funds and has warned of enormous legal risks.
Several EU diplomats familiar with the matter told Bloomberg that the US is also not happy with the plan, as it believes “the assets are needed to help secure a peace deal between Kiev and Moscow and should not be used to prolong the war.”
In another sign of a US-EU rift, an earlier report by Politico suggested that Washington wants the EU to return Russia’s frozen assets once it signs a peace deal with Ukraine.
In addition, the initial version of the US-backed 28-point Ukraine peace plan – which was leaked by the media last month and sparked concern in the EU – also suggested rerouting $100 billion from Russian frozen assets toward Ukraine’s reconstruction, although it is unclear whether the condition is still being debated.
Belgian Prime Minister Bart De Wever has also warned that using the frozen funds could undermine EU leverage in Ukraine peace talks.
Nevertheless, EU Commission President Ursula von der Leyen has pressed ahead despite Belgium’s concerns, and has presented two proposals to fund Ukraine.
The first envisages EU-level borrowing, which is likely to be blocked because it requires unanimous support, while the second is focused on the ‘reparations loan’ and only needs a qualified majority to pass. Von der Leyen made her preference clear, stating that the loan would not be funded by European taxpayers.
Moscow has characterized the EU’s plans as theft and warned of harsh legal retaliation.
