Britain is considering loans for Ukraine based on frozen Russian assets

Britain is considering loans for Ukraine based on frozen Russian assets

The British government is considering funding a new wave of loans for Ukraine. This is planned to be done using billions of pounds of Russian state assets frozen in the United Kingdom.

This is reported by Politico.

The country’s Finance Minister Rachel Reeves presented a controversial plan, which may mirror a similar initiative proposed by the European Union, to EU finance ministers at a ministerial meeting in Copenhagen on Saturday. Reeves did not announce specific details about how the plan would work but emphasized that the loans would comply with international law and would not involve the outright confiscation of Russian state assets.

While the majority of Russian assets—185 billion euros—are frozen in the EU at the Brussels-based depository Euroclear, around 25 billion pounds are held in the United Kingdom.

These 25 billion pounds would fund the British "reparation loans" scheme, which, according to the country’s finance ministry, "will work in close coordination" with the EU program. It was added that the proposals "under consideration" could "unlock funding up to the full value of the assets held in the UK."

Under the proposed EU scheme, Brussels would issue loans to Ukraine worth up to 172 billion euros, exchanging Russian funds tied to frozen assets for zero-interest bonds.

The EU hopes that by replacing the funds with debt instruments backed by EU guarantees, this proposal will avoid accusations of direct confiscation of money. However, Euroclear, the private depository holding the Russian assets, has warned against any policy that could expose it to legal risks or undermine financial integrity.

Reeves stated on Saturday that the UK "will only consider options that comply with international law and are economically and financially responsible."

Europe is urgently seeking additional funding for Ukraine, which faces a budget deficit next year.

A 45-billion-euro loan for Ukraine, organized by G7 countries, has almost been fully disbursed. Until now, the EU has used interest earned from investing frozen Russian assets to repay its share of the loan, but the issue of using the assets themselves has divided leaders.

Under the EU proposal, Ukraine would only have to repay the loan once Moscow pays reparations for the war, which is considered unlikely. Whether this form of lending would be safe for Ukraine is something financial experts must determine.

The European Central Bank opposes the direct confiscation of frozen assets and appears to have doubts about the EU’s "reparation loans" scheme as well. Speaking at a press conference in Copenhagen on Friday, ECB President Christine Lagarde said: "Our concerns have been expressed in the past and remain unchanged."

"On an issue that is so sensitive and can be so complex as this… I want to see something in writing, and I’m not the only one. I think all member states involved in the process will want to see something in writing," Lagarde said.