European countries are developing a backup mechanism to prevent Ukraine from facing a financial collapse at the start of 2026. According to Politico, Brussels is urgently working on a “Plan B” in case EU leaders fail to reach an agreement on using frozen Russian state assets in time.
Deadlock Over Russian Assets
A month ago, EU leaders hoped to approve a proposal to provide Kyiv with a “reparations loan” of around €140 billion, backed by frozen Russian reserves. However, the plan encountered firm opposition from Belgian Prime Minister Bart De Wever, as most of these assets are held in Belgium. Brussels fears legal consequences and potential retaliation from Moscow.
Meanwhile, the situation on the battlefield and Ukraine’s rapid depletion of financial resources have made the issue increasingly urgent. One European official cited by Politico warned: “If we don’t move forward, others will move before us.”
The Reparations Loan and President Donald Trump’s Peace Initiative
Politico notes that President Donald Trump’s new peace initiative may strengthen support for the idea of using frozen Russian assets as collateral for a long-term loan to Kyiv. Under the EU plan, Moscow would only be entitled to repayment if it voluntarily agrees to compensate Ukraine for war damages.
European Commission President Ursula von der Leyen is expected to instruct her legal team to prepare a draft mechanism for the reparations loan in the coming days. However, talks with Belgium remain difficult: De Wever continues to raise concerns about legal liabilities and possible Russian retaliation.
A “Bridging” Loan as an Emergency Alternative
To ensure Ukraine does not run out of money at the start of 2026, Brussels is considering an emergency “bridging loan” financed through EU borrowing. This short-term measure would give the bloc more time to design a full-scale reparations mechanism acceptable to Belgium.
Diplomats suggest that Ukraine could later repay this temporary loan using funds from the long-term reparations loan.
France, Germany, the Netherlands, Lithuania, and Luxembourg urged the Commission to keep working on all available financing options during a recent meeting. As early as November, EU Commissioner Valdis Dombrovskis cautioned: “The longer we delay, the more difficult the situation will become.”
The Need for Urgency and the Position of EU Governments
The European Commission is acutely aware of the time pressure: Kyiv warns it may exhaust its financial resources within the first months of next year. French President Emmanuel Macron has said that EU allies will present a solution “in the coming days” to ensure predictable and stable support for Ukraine.
In the long term, EU capitals see virtually no alternative to the reparations loan. National budgets are already strained by deficits and rising borrowing costs, making direct grants unfeasible. This is why bringing Belgium on board is seen as essential.
Obstacles: Hungary and Debates Over EU Borrowing
A major hurdle remains the requirement for unanimous approval from all 27 EU member states, as the bridging loan would rely on joint EU borrowing. Hungary has consistently opposed new financial measures aimed at supporting Ukraine’s war effort. To mitigate resistance, some in Brussels suggest framing the loan as support for Ukraine’s reconstruction, rather than military needs.
Peace Negotiations and the Fate of Russian Assets
Politico reports that accelerating work on a peace plan promoted by President Donald Trump’s team makes the issue of Russian assets even more central to future arrangements. Updated drafts of the American proposal envision these frozen reserves as a key source of funding for Ukraine’s reconstruction.
Earlier, the EU reacted negatively to the idea — contained in initial drafts — that the United States could profit from managing the assets. Now European leaders hope Washington has accepted their position: the final say over the assets, the timing of sanctions relief, and Ukraine’s EU accession should remain in European hands.
This article was prepared based on materials published by Politico. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
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