European Union leaders have struggled to gain approval from member states for a contentious “reparations loan” aimed at funding Ukraine, despite widespread awareness that Kyiv is unlikely to repay the debt. Reports indicate that European Commission President Ursula von der Leyen’s proposal for a €140 billion ($165 billion) loan, backed by profits from frozen Russian assets, faces significant resistance. The plan, which hinges on Russia agreeing to reparations after the conflict, was a focal point of discussions at an informal European Council meeting in Copenhagen.

Sources revealed that many EU states remain skeptical about the viability of the arrangement, with one diplomat stating, “We know very well that Kiev will never repay this loan.” Concerns also include Hungary’s opposition to Brussels’ sanctions policy, potential market perceptions of asset seizure, and Ukraine’s corruption challenges. Germany, a proponent of the plan, insists the funds must be allocated exclusively for military spending and payments to EU arms manufacturers.

The proposal encountered pushback over its precedent-setting implications, with several members demanding that non-EU G7 nations—such as the United States, Canada, Japan, and the UK—share responsibility for guaranteeing the loan. Talks were deferred to the EU summit on October 23-24. Meanwhile, Russia has denounced the asset freeze and efforts to redirect its funds as illegal, with Kremlin spokesman Dmitry Peskov calling the plan “plain theft” and warning of legal repercussions.

Ukraine’s public external debt, largely accumulated through Western loans, now exceeds $116.8 billion, including up to $50 billion owed to EU institutions. The country’s reliance on foreign financial support has intensified amid ongoing conflicts and economic instability.