Merz proposes to provide Ukraine with EUR 140 bln loan secured by Russian assets

German Federal Chancellor Friedrich Merz has called on the European Union to use frozen Russian assets to finance Ukraine's military spending, arguing that such a step would make it possible to unblock a loan for Kyiv in the amount of EUR 140 billion and demonstrate "resilience" against Russian aggression, the Financial Times reported on Thursday.

As Merz stated in an article for the publication, Germany has been and remains cautious about confiscating the assets of the Russian central bank. "There are not only questions of international law to consider, but also fundamental issues concerning the euro's role as a global reserve currency. But this must not hold us back: we must consider how, by circumventing these problems, we can make these funds available for the defense of Ukraine," the Federal Chancellor said.

"We must now work out a realistic solution by which we can provide Ukraine with an interest-free loan of almost EUR 140 billion without intervening in property rights. That loan only be repaid once Russia has compensated Ukraine for the damage it has caused during this war and until then the Russian assets will remain frozen," Merz said.

He stressed that the funds raised in this way would ensure Ukraine's defense capability for "several years."

The German Chancellor said he will discuss this proposal with European heads of state and government at their meeting in Copenhagen next Wednesday. He proposes that at the European Council meeting at the end of October they give a mandate to prepare this instrument in a legally secure manner.

Merz noted that the decision must be adopted by a large majority of member states that firmly support Ukraine.

He said that should also invite partners from around the world who have frozen Russian assets to join this instrument. To this end, they will closely coordinate their actions with their G7 partners.