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Germany's Merz pushes for use of frozen Russian assets for Ukraine
Published by Global Banking and Finance Review
Posted on September 25, 2025
3 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 25, 2025
3 min readLast updated: January 21, 2026
Germany's Chancellor Merz supports using frozen Russian assets for Ukraine, proposing an EU loan to aid Ukraine's war effort without violating property rights.
BERLIN (Reuters) -German Chancellor Friedrich Merz is advocating for the European Union to unlock up to 140 billion euros ($163.72 billion) in frozen Russian assets to finance Ukraine's war effort, marking the first public expression of support at this level from Germany for such a move.
The proposal of an interest-free EU loan, outlined in a Financial Times editorial, aims to provide long-term support for Ukraine without violating property rights.
The assets would remain frozen until Russia pays reparations for the war, Merz suggested, addressing longstanding legal and financial concerns that had previously made Germany and other EU states wary of confiscating Russian assets.
Under the plan, the loan would initially be guaranteed by member states and later backed by the EU’s long-term budget from 2028.
"We need a new impetus to change Russia's calculations," Merz said in the editorial. "Now is the moment to apply an effective lever that will disrupt the Russian president's cynical game of buying time and bring him to the negotiating table."
The loan would have to be paid back once Russia has committed to reparations for the damage caused during its war on Ukraine.
The editorial marks the first time Merz has given his backing to an EU plan to send the roughly 210 billion euros held in a Belgian depository to Ukraine without confiscating it - a red line for many member states and the European Central Bank.
The plan, important for Ukraine support amid uncertainty over the United States' commitment to Kyiv under President Donald Trump, is likely to dominate an informal EU summit in Copenhagen next week.
"I propose that, at the European Council at the end of October, we give the mandate to prepare this instrument in a legally secure manner," Merz said, adding that payments should be disbursed in tranches and decisions on the arms procured should be taken jointly by Kyiv and EU member states.
Until now, the EU has taken only interest generated from the Russian assets, which were frozen after Moscow's invasion of Ukraine in February 2022.
Germany, the EU's biggest economy and Ukraine's second-biggest military backer, has previously expressed legal concerns over any proposals to seize the assets completely.
The United States has long been Ukraine's biggest single backer and weapons supplier, but Trump says Europe should take on a much greater share of its own defence burden.
($1 = 0.8566 euros)
(Reporting by Andreas Rinke; Writing by Friederike Heine, Editing by Timothy Heritage and Bill Berkrot)
A frozen asset is a financial asset that has been restricted from being accessed or transferred, often due to legal or regulatory actions.
Reparations are compensations made by a country or entity to another for damages caused, often in the context of war or conflict.
An interest-free loan is a loan that does not require the borrower to pay any interest on the amount borrowed, making it less expensive over time.
The EU's long-term budget, also known as the Multiannual Financial Framework, outlines the EU's spending priorities and limits for a set period, typically seven years.
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