Concluding discussions between EU finance ministers on Thursday 13 November, Danish Minister for Economic Affairs, Stephanie Lose, said that, of the various options that would enable the European Union to continue financing Ukraine, the ‘Reparation Loan’ is “the most realistic” and “should be treated as a matter of highest priority” (see EUROPE 13737/1).
As envisaged by the European Commission (see EUROPE 13720/4), the purpose of the’ Reparation Loan’ will be to make the best possible use - without legally confiscating them - of the cash balances from the Russian public assets frozen in the EU, of which €185 billion are held by the Euroclear clearing house based in Belgium. Ukraine would repay this loan only after Russia had paid war reparations. Such an arrangement presupposes that the sanctions against the Bank of Russia, which are renewed every six months, remain in place until then, and that the EU and its Member States act as guarantors so as not to leave Belgium on its own in the event of litigation initiated by Russia.
“It remains clear that the EU’s leadership and unity of the EU remain essential in supporting Ukraine’s struggle”, said Ms Lose, inviting reflection on the consequences of inaction. She pledged the full commitment of her counterparts to “facilitate a decision at the European Council in December”.
That same morning, at the European Parliament, the President of the European Commission, Ursula von der Leyen, gave her assurance that the EU would honour its promise to meet Ukraine’s financial needs over the coming years. She listed “three options”: (1) using the EU budget’s headroom to raise funds on the capital markets; (2) concluding an intergovernmental agreement under which the Member States would raise the necessary capital by themselves; (3) granting the ‘Reparation Loan’.
According to Ms von der Leyen, the third option is “the clearest way to make Russia understand that time is not on its side”.
At the end of the Ecofin Council, the European Commissioner for Economic Affairs, Valdis Dombrovskis, also pointed out that the ‘Reparation Loan’ option would place the least burden on national public finances.
He noted several disadvantages of the other options, bearing in mind that, given the IMF’s concerns about the sustainability of Ukraine’s debt, the option chosen would have to be treated as a grant for Ukrainian public finances. If a loan is taken out and pledged against the EU budget, the Member States will have to bear the interest until it is repaid. If the Member States themselves borrow on the markets to provide bilateral subsidies to Ukraine, they will have to bear the “high costs” in terms of debt servicing.
Involvement of third countries. Given that the European solution for financing Ukraine would not be in place by the beginning of 2026, and that Ukraine’s needs are “significant and urgent”, Mr Dombrovskis hoped that the EU’s partners, particularly within the G7, would get involved to bring forward the payment of their own financial support “to the first quarter of next year”.
It should also be noted that, according to the European Commissioner, Canada and the United Kingdom are considering providing a bilateral loan to Ukraine along the lines of the ‘Reparation Loan’, and that similar discussions are underway with Japan.
Present in Brussels for an EU-EFTA ministerial meeting, the Norwegian Finance Minister, Jens Stoltenberg, indicated that his country had decided to triple the amount of its annual military support to Kyiv for 2025 and 2026, bringing it “to €7.3 billion”. If we measure this support against GDP and per capita, “we are on top”, he highlighted.
Asked about a possible Norwegian contribution to a future EU loan to Ukraine, he repeated several times that “Mr Dombrovskis made it clear that the EU has no plans to ask Norway to be part of this lending scheme”. It is too early to have “a clear opinion” on a programme that is not the subject of a formal proposal, he added.
Assistance tranches. On Thursday, the Commission disbursed a further €4.1 billion to Ukraine under the preferential ‘ERA’ loans granted by the G7 countries and pledged against the profits made on Russian public assets frozen in the EU. This envelope is the final tranche of the EU loan totalling €18 billion.
The Ukrainian authorities have also received a sixth tranche of macro-financial assistance, worth €1.8 billion, under the €50 billion ‘Ukraine Facility’ for the period 2024-2027. (Original version in French by Mathieu Bion)