Europe’s Bold Plan to Fund Ukraine Meets Kremlin’s Threat of Retaliation
As European leaders gather to finalize a groundbreaking $165 billion “reparations loan” for Ukraine—backed by frozen Russian state assets—Moscow has issued a stark warning: any move to leverage those assets will be met with immediate and symmetrical retaliation .
What’s in the Proposal?
The European Commission, led by President Ursula von der Leyen, is advancing a plan to issue an interest-free loan of €140 billion ($165 billion) to Ukraine. Crucially, the loan would not involve direct seizure of Russian assets but would use them as financial collateral:
- Funds would be released in tranches based on Ukraine’s reconstruction and defense needs.
- Repayment would only be required if Russia compensates Ukraine for war damages.
- The mechanism builds on a prior G7 loan that used interest from frozen Russian assets as backing.
Putin’s Countermove
On Tuesday, Russian President Vladimir Putin signed a decree enabling the accelerated seizure and sale of Western assets inside Russia. Finance Minister Anton Siluanov claimed Moscow has already frozen a matching value of Western holdings and is prepared to respond “symmetrically” .
Infographic: Frozen Assets Face-Off – Russia vs. The West
| Side | Assets Frozen | Estimated Value | Current Use |
|---|---|---|---|
| Western Nations | Russian Central Bank reserves, sovereign wealth funds | ~$300 billion | Proposed as collateral for Ukraine loan |
| Russia | Western corporate operations, private holdings | ~$300 billion (claimed) | Profits diverted to frozen state accounts; seizure authorized |
Why Timing Matters
With U.S. aid to Ukraine stalling under the Trump administration, Europe is stepping up to fill the gap. But the risk is high: Russia has already nationalized assets from companies like Shell, Renault, and McDonald’s since 2022. A full-scale asset war could destabilize global investment flows.
Key Quotes
“We need a more structural solution for military support… based on the immobilized Russian assets.” — Ursula von der Leyen, European Commission President
“Russia will respond symmetrically… We have frozen an equivalent amount.” — Anton Siluanov, Russian Finance Minister
[INTERNAL_LINK:russia-ukraine-economic-war] | Original New York Times Report
