US urges Europeans to oppose EU plans for loan to support Ukraine

BRUSSELS – The US lobbied several countries in the European Union in an effort to block EU plans to use frozen Russian central bank assets to back a massive loan to Ukraine, according to European diplomats familiar with the matter.

US officials told member states that the assets are needed to help secure a peace deal between Kyiv and Moscow and should not be used to prolong the war, said the diplomats, who spoke on condition of anonymity.

The EU put forward a proposal this week to use the immobilised assets to back

a €90 billion (S$135.9 billion) loan

to cover Ukraine’s economic and military needs for the next two years.

There are about €210 billion of frozen Russian assets on EU soil and more of those could be used from 2028 on. 

The US State Department’s press office did not respond to a request for comment.

The discussions come at a critical time for Ukraine, with the US pressuring Kyiv to agree to a potentially lopsided peace deal with Russia.

Ukraine risks running out of money in early 2026 and the US administration has cut off most aid, putting the onus on Europe. 

Washington has been eyeing the Russian assets as part of proposals to enable peace talks with Moscow, suggesting they could be used to fund US-led post-war investments.

A

US 28-point peace plan

has been modified since it first emerged in November, but assets remain one of the key sticking points, along with the status of Ukrainian territories and providing Kyiv with robust security guarantees, some of the people said.

European leaders have been adamant that how to use the assets is a European matter as the frozen funds are mostly held in Europe.

There is “no possibility of leaving the money we mobilise to the US”, German Chancellor Friedrich Merz said on Dec 4.

“The American government knows this and this is also the German government’s negotiating position,” he said. “This is also the consensus at the European level. There are absolutely no differences of opinion on this. This money must flow to Ukraine – it must help Ukraine.”

The EU plan to use the assets faces domestic opposition as well, particularly from Belgium, where most of the funds are held.

Mr Merz will travel to Brussels on Dec 5 for talks with Belgian Prime Minister Bart De Wever and European Commission President Ursula von der Leyen in an effort to break down Belgian resistance to the EU plan.

Mr Merz, who has been a strong advocate of using the Russian assets to aid Ukraine, told reporters that he takes the Belgian premier’s concerns “very seriously” and that he would try to address them at their meeting.

“I don’t want to persuade him but rather, convince him,” he said at a news conference on Dec 4 in Berlin after talks with German regional leaders.

“If we take this path, we will do so to help Ukraine, possibly for the next two to three years.”

Belgium argues that it has yet to receive sufficient guarantees that it would not be left on the hook alone to foot any future bill should Moscow win any future claims on recovering the assets.

It says that using the frozen funds would open Europe, and its companies, to Russian retaliation.

Belgium’s national budget has received hundreds of millions of euros in tax revenue from the immobilised funds, though it argues that the money is being used to provide aid to Ukraine.

Belgium’s current rejection of the plan

remains the main stumbling block to its approval ahead of an EU leaders’ summit later in December, where the bloc will be aiming to sign off on the proposals.

The EU has proposed backing the loan using the bloc’s budget or through bilateral guarantees from member states.

The assets would remain frozen and Kyiv would have to pay the loan back only if Russia agrees to finance the country’s reconstruction and compensate it for the damage the war has inflicted.

Hungary is also against the plans and Slovakia said it will not back proposals that provide Ukraine with military support.

Approval would only require a qualified majority of member states. The commission has floated the option of issuing joint debt if they cannot reach an agreement to use the immobilised assets.

But member states, including Germany, reject that idea and the fact that it requires unanimity makes it improbable. BLOOMBERG