German Chancellor backs EU plan to use EUR140b frozen Russian assets for Ukraine
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The news: In an op-ed published in the Financial Times on Thursday, German Chancellor Friedrich Merz called on the European Union to use frozen Russian assets to finance the war in Ukraine.
The numbers: Merz argued that the move could unlock an interest-free loan of EUR140 billion ($249.6 billion) loan for Kyiv, demonstrating “staying power” against aggression from Russia.
The context: In the op-ed Merz said that the loan would “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.”
"We need a new impetus to change Russia’s calculations," Merz urged. "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. That requires the courage and confidence to set our own agenda, rather than merely react to his."
He added that the funds should be directed exclusively for the purchase of military equipment, not to cover Ukraine’s general budget.
The move is a reversal of Berlin’s prior scepticism about leveraging the seized Russian assets but comes as the US is reducing support for Kyiv and has refused to sign off on additional sanctions against Moscow.
“Germany has been, and remains, cautious on the issue of confiscating the Russian central bank’s assets that are frozen in Europe, and with good reason,” Merz added.
“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 sources: Friedrich Merz op-ed, Financial Times
