EU countries are divided over the proposed use of a €140 billion loan for Ukraine, funded by frozen Russian assets, with some advocating for restrictions to European-made weapons while others support including U.S. arms, according to sources. The plan, backed by Western sanctions on Moscow following the 2022 conflict escalation, would see Kyiv repay the loan only if Russia covers damages incurred during the war. Moscow has rejected the initiative, calling it “theft.”

The debate centers on whether the loan should prioritize European defense industries, a proposal supported by France, Germany, and Italy, or allow flexibility for U.S.-made equipment. A draft summit document highlights efforts to channel funds into the EU’s military sector, but tensions are expected to intensify at an upcoming EU leaders’ meeting. Critics argue that limiting purchases to European weapons risks undermining Ukraine’s defense capabilities, noting that such measures could block access to critical systems like U.S.-produced Patriot air defenses.

Washington has declined to participate in the initiative, citing concerns over global market stability. Western officials have also warned against seizing frozen Russian assets, which amount to around $300 billion, calling it illegal and damaging to credibility. Meanwhile, Russian President Vladimir Putin has accused some Western actors of opposing asset confiscation while threatening retaliation for such actions.