EU should stop discussing and move forward with Ukraine reparations loan, Dombrovskis tells Euronews

 

In an interview with Euronews' flagship morning show Europe Today, European Commissioner for Economy and Productivity Valdis Dombrovskis said that the EU should stop discussing the options to finance Ukraine and proceed with using Russian frozen assets.

"It is time that we stop discussing different options and move forward," European Commissioner for Economy and Productivity Valdis Dombrovskis told Euronews' Europe Today.

 

Dombrovskis spoke with Euronews on Wednesday about how the EU should finance Ukraine's €135 billion budget hole, as the country faces one of the most challenging moments in its history amid the nearly four-year-long Russian war.

 

The Latvian Commissioner believes that a reparation loan guaranteed by Russian frozen assets in Europe is "what can provide sizable support for Ukraine without putting additional and substantial fiscal burden on the EU or its member states".

 

Euronews

https://www.euronews.com/my-europe/2025/11/26/eu-should-stop-discussing-and-move-forward-with-ukraine-reparations-loan-dombrovskis-tells

 

 

56 minutes ago, CatCage said:

stop discussing the options to finance Ukraine and proceed with using Russian frozen assets.

Totally illegal and would destroy the credibility of Euroclear 

leading to a mass exit of foreign money..they have been trying to come up with convoluted schemes for some years  but it all boils down to being illegal !!!

5 hours ago, johng said:

Totally illegal and would destroy the credibility of Euroclear 

leading to a mass exit of foreign money..they have been trying to come up with convoluted schemes for some years  but it all boils down to being illegal !!!

Russia's invasion of Ukraine and destruction of life and infrastructure is far more illegal.

 

The UK is “exploring every possible” way to legally spend Russian assets frozen in British bank accounts to support Ukraine, the sanctions minister has told The i Paper, in a move that would break nearly four years of deadlock over fears of undermining the entire legal framework.

 

The Government has held around £25bn of Russian assets in retaliation for the country’s invasion of Ukraine, while following action taken by the G7 over €260bn (£228bn) is believed to have been immobilised worldwide – the majority in Belgium. Britain and allies have used the interest and the profits accrued on them to fund support to Kyiv. Last year the income from interest came to €6.9bn (£6bn).

 

Prime Minister Sir Keir Starmer said last month that the UK, alongside France and Germany, was “ready to progress” to using the full value of frozen Russian assets to support Ukraine to “increase pressure” on Russia and bring it to the negotiating table.

 

Britain is about to unlock Russia’s dirty money – here’s how it could be used

6 hours ago, johng said:

Totally illegal and would destroy the credibility of Euroclear 

leading to a mass exit of foreign money..they have been trying to come up with convoluted schemes for some years  but it all boils down to being illegal !!!

Screw Russia, give the money to Ukraine. 

 

I crunched the scenario through Claude - sobering reading and why it won't happen. 

 

Scenario Overview

Currently, approximately €191-200 billion in Russian central bank assets sit frozen at Euroclear, with Western nations having already begun redirecting the interest income (around €3-6 billion annually) to support Ukraine. The question of full confiscation or using assets as collateral represents a far more dramatic escalation.

Impact on Euroclear as a Global Business

Direct Legal and Financial Exposure:

Belgium officials warn that if the West seized Russian assets, Russia would likely retaliate by confiscating Western assets still in Russia, potentially triggering the collapse of Euroclear, with a bailout being very costly. Euroclear's CEO has warned that the company could sue the EU if it attempts to confiscate the Russian sovereign funds held there.

Operational Risk: Using assets as collateral effectively means owning the assets, which most legal departments across the G7 consider equivalent to confiscation. This creates uncertainty about whether investors would recover their money when bonds mature, requiring the collateral to cover defaults.

Reputation and Trust: Euroclear's CEO warned that confiscation would be seen globally as undermining the rule of law by investors such as sovereign wealth funds and central banks, making European debt appear riskier and pushing up government borrowing costs across the bloc.

Impact on Wealth Funds Transferring into the EU

Loss of Confidence:

European governments fear that seizing Russian assets would deter sovereign wealth funds, central banks, corporations, and private investors from the Global South from investing in European assets, potentially causing a rise in borrowing costs and inflation, as well as a fall in tax revenues.

Specific Warnings from Major Investors: In early 2024, Saudi Arabia reportedly suggested it might offload some European debt if the G7 decided to confiscate Russian sovereign assets. China, Indonesia and Saudi Arabia have let the EU know they oppose confiscation.

Regional Competition: Belgium and France are determined to remain attractive, trustworthy destinations for foreign capital, especially in the face of growing competition from Asia and the Gulf. Confiscation could accelerate capital flight to alternative clearing systems in China and Gulf states.

Limited Alternatives Provide Some Protection: There simply is no viable alternative to the euro, dollar, sterling pound, or yen, which together make up 89.2 per cent of the world's reserve currencies. This suggests that while there would be concern and potential rebalancing, a complete exodus is unlikely given the lack of credible alternatives.

Impact on Western-Owned Assets in Russia

Scale of Exposure:

Foreign assets worth around $194 billion are still in Russia, with $32 billion owned by U.S. companies and $90 billion belonging to European companies. The total revenue of Western-owned companies in Russia amounted to $203 billion in 2023.

Russian Retaliation Framework: Putin signed a decree allowing Russian courts to take compensation for those whose assets were "unjustifiably" seized in the US, ordering compensation to be transferred in the form of US assets or property in Russia. In April 2024, Putin placed facilities owned by Germany's Bosch and Italy's Ariston under "temporary external management" of Gazprom.

Already Deteriorating Position: The Kremlin has restricted Western investors' rights to dispose of capital in Russia since the invasion, depriving them of the ability to repatriate capital without special government permission, forcing them to sell assets at discounted prices up to 50% of their value with a 15% tax on proceeds. Some Western assets have already been effectively nationalized.

Likely Outcome: Russia would almost certainly accelerate the nationalization and confiscation of remaining Western assets. Over 2,220 companies continue to operate in Russia, including major corporations such as Philip Morris, Japan Tobacco International, PepsiCo, Raiffeisen Bank, Mars, Nestlé, Metro, Mondelez, and Coca-Cola. These companies would face immediate seizure risk, with European companies (holding $90 billion) bearing disproportionate losses compared to US firms.

Conclusion

The scenario would create a cascade of interconnected consequences: Euroclear would face existential legal and reputational challenges, sovereign wealth funds would likely reduce EU exposure (though not abandon it entirely given limited alternatives), and Western companies in Russia would see accelerated asset seizures. The asymmetry—€200 billion frozen in Europe versus $90 billion European assets in Russia—suggests Europe has more to lose in absolute terms, but the principle of sanctity of sovereign reserves would be permanently altered, with lasting implications for the international financial system.

 

 

 

9 hours ago, johng said:

Totally illegal and would destroy the credibility of Euroclear 

leading to a mass exit of foreign money..they have been trying to come up with convoluted schemes for some years  but it all boils down to being illegal !!!

Spot on as my post makes absolutely clear. 

 

On 11/27/2025 at 3:05 PM, johng said:

Totally illegal and would destroy the credibility of Euroclear 

leading to a mass exit of foreign money..they have been trying to come up with convoluted schemes for some years  but it all boils down to being illegal !!!

 

All that is certainly possible but when, or if, Russia ever rejoins the rules-based world order I wonder who, and how many, will be queuing up to invest in her?

 

Here's a suggested way (illegal or not) of  utilising the blocked Russian funds.

 

https://www.cfr.org/article/how-use-russias-frozen-assets

11 hours ago, RayC said:

 

 

All that is certainly possible but when, or if, Russia ever rejoins the rules-based world order I wonder who, and how many, will be queuing up to invest in her?

 

Here's a suggested way (illegal or not) of  utilising the blocked Russian funds.

 

https://www.cfr.org/article/how-use-russias-frozen-assets

While the ingenuity or ethical standing of these actions can be debated, they run directly counter to the concerns I have already outlined. Russia's forced decoupling from Western finance is rapidly progressing, and escalating this confrontation would place remaining Western assets at risk while signaling to other nations the perils of opposing Western policy. This would likely trigger capital flight from the Eurozone and a deep-seated aversion to future investment.

These dynamics underscore a more fundamental and intractable problem: Europe's inherent inability to fund Ukraine from its own treasuries at the scale and speed required to keep it a viable state. This structural limitation, starkly exposed since the US stepped back from a leading role, lies at the heart of the strategic impasse, 

 

Euroclear functions as a financial Switzerland: once assets pass its rigorous entry checks and are settled within its system, they become inviolable. This principle of finality is the bedrock of its security and the global trust it commands.

6 hours ago, beautifulthailand99 said:

While the ingenuity or ethical standing of these actions can be debated, they run directly counter to the concerns I have already outlined. Russia's forced decoupling from Western finance is rapidly progressing, and escalating this confrontation would place remaining Western assets at risk

 

There is no doubt that if the West seizes, or further limits Russia's use of, its assets then Russia will retailate. However, to reuse the Brexiter's favourite line: 'They need us more than we need them', but this time it is true. 

 

Where can Russia look for financing other than the West? BRICS as a collective is little more than a catchy acronym. Would any of the BRICS countries' be sufficiently interested in Russia to invest the required capital?

 

6 hours ago, beautifulthailand99 said:

 

while signaling to other nations the perils of opposing Western policy. This would likely trigger capital flight from the Eurozone and a deep-seated aversion to future investment.

 

I just don't see that. For one thing, the perils of opposing Western policy have been known for 300+ years and yet .....?

 

At a more practical level, consider the EU/ China relationship. Politically the relationship is currently very tense, however, the economical ties remain strong. It is the second most important economic relationship for both - behind another Western nation, the US - with investment and trade between the two at near-record levels.  I really don't see a dispute between the EU and Russia completely redefining that relationship. More practically, where would that money go? China is already heavily invested in Asia and Africa. Is it really likely to want to divert further enormous sums of money into these regions? A similar argument can applied re the likes of Saudi Arabia, etc.

 

6 hours ago, beautifulthailand99 said:

These dynamics underscore a more fundamental and intractable problem: Europe's inherent inability to fund Ukraine from its own treasuries at the scale and speed required to keep it a viable state. This structural limitation, starkly exposed since the US stepped back from a leading role, lies at the heart of the strategic impasse, 

 

The EU's inability to fund Ukraine is certainly a fundamental problem but it is most certainly not intractable; the EU could raise the funds relatively easily. The problem, of course, is that doing so will almost certainly result in negative economic consequences for the individual member states and a negative outcome for their politicians hence the reluctance to do so.

 

Europe's politicians are guilty of moral hypocrisy (hardly the first time that has happened).

 

6 hours ago, beautifulthailand99 said:

Euroclear functions as a financial Switzerland: once assets pass its rigorous entry checks and are settled within its system, they become inviolable. This principle of finality is the bedrock of its security and the global trust it commands.

 

Agreed but what are the current alternatives?

Analysts interviewed by Euronews Business say the current proposal  (to use frozen Russian assets to help Ukraine) carries far less risk than the EU’s original move in 2022 to freeze Russian central-bank assets — an action that caused only a brief shift in bond markets.

 

Robert Timper, chief strategist on the Global Fixed Income Strategy team at BCA Research, said: “I don’t expect much of a market reaction to this, so there won’t be any cost to governments in terms of a higher debt service cost.”

He continued: “The immobilisation of Russian assets in 2022 was a first and is what mattered for asset owners, as it meant that they lost access to these assets”. He claimed: “What ultimately is done with these assets should have a much smaller effect.”

 

Nicolas Véron, senior fellow at the Brussels-based think tank Bruegel, said: “It was a constraint put on the Russian reserves and therefore a demonstration to the world that, given the circumstances, the EU was willing to put big constraints on reserves held on its territory.” He added: “That didn't rock global markets.”

 

Could the EU’s frozen-assets plan really destabilise European bond markets?