European Commission to move ahead with proposal to use Russia's frozen assets for Ukraine, sources say

BRUSSELS: The European Commission plans to make a legal proposal this week to use frozen Russian assets to fund Ukraine while also leaving open the possibility of borrowing on financial markets or mixing the two options, four sources told Reuters on Tuesday.

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EU leaders agreed to meet Ukraines financial needs but hesitated to use frozen Russian assets due to Belgium's legal concerns.
The proposed plan links a loan to Russia paying reparations, with flexibility for EU borrowing as an alternative.
The European Commission will adopt legal proposals soon to finalise financing options for Ukraine.

EU leaders agreed in October to meet Ukraine's "pressing financial needs" for the next two years but stopped short of endorsing a plan to use 140 billion euros ($162 billion) in frozen Russian sovereign assets in Europe as a loan for Kyiv, due to concerns raised by Belgium.

Most of the Russian assets frozen in Europe are in the accounts of Belgian securities depository Euroclear and the Belgian government has repeatedly raised concerns about legal risks.

Under the Commission's plan, Ukraine would only need to repay the loan if Russia pays reparations for damage caused by waging war against its neighbour.

The European Union's executive is expected to adopt the proposal on Wednesday that includes its favoured plan for a reparations loan linked to the cash balances of Russia's immobilised central bank assets.

The legal text would keep the door open for a loan funded by EU borrowing on the financial markets, and for switching between the two options, the sources said.

A European Commission spokesperson did not comment on the substance of the proposed text, writing in response to a question from Reuters on Tuesday that commissioners "will discuss the financing options for Ukraine tomorrow at their weekly meeting" and are "due to adopt the respective legal proposals".