In an editorial published in the Financial Times on Thursday 25 September, German Chancellor Friedrich Merz called for greater use to be made of 'frozen' Russian assets in the European Union.
While reiterating the need to take account of international law and the “fundamental issues” concerning the euro’s role as a global reserve currency, the chancellor said that “we must consider how, by circumventing these problems, we can make these funds available for the defence of Ukraine”.
In his view, “a viable solution should now be developed whereby - without intervening in property rights - we can make available to Ukraine an interest-free loan of almost €140 billion in total”, which would make it possible to secure the country’s defence capabilities for several years and would therefore be reserved exclusively for financing military equipment. The funds would be paid out in instalments.
“This loan would only be repaid once Russia has compensated Ukraine for the damage it has caused during this war. Until then, the Russian assets will remain frozen, as decided by the European Council”, explained the chancellor, who specified that such assistance will require budgetary guarantees from the Member States. “Those bilateral guarantees should, as soon as the next Multiannual Financial Framework is in place in 2028, be replaced by collateralisation under the EU’s long-term budget”, emphasised Mr Merz. He added that this mechanism should be open to all partners around the world who have frozen Russian assets, working closely with the G7.
According to the Chancellor, this issue will be discussed at the informal summit on 1 October, and he hopes that the Commission will be given a mandate to “prepare this instrument in a legally secure manner” at the European Council on 23 and 24 October.
The European Commission is currently preparing an initiative using frozen Russian assets to finance the Ukrainian war effort (see EUROPE 13713/2). (Original version in French by Camille-Cerise Gessant)