Ukraine could use reparations loan to buy weapons outside Europe, document shows

The European Commission has suggested Ukraine use part of an envisaged 140 billion euro ($163 billion) reparations loan funded from frozen Russian assets to buy weapons outside the EU, a commission paper sent to member states showed.

The paper, seen by Reuters on Friday, outlines the possible design of the plan floated by the European Union's executive body last month.

The proposal would split the loan in two parts, with the biggest leg meant for the development of Ukraine's defence industry and the procurement of defence material in Ukraine and the 27-nation EU.

The second leg would consist of budget support, which would allow Ukraine to also buy weapons elsewhere to help in its grinding battle against Russia's full-scale invasion and intensifying missile and drone strikes.

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The budget support would also help Kyiv provide financial assurances needed to obtain further assistance from the International Monetary Fund, the document stated.

German Chancellor Friedrich Merz said on Thursday he would call at the upcoming EU summit for the bloc to use Russian assets frozen in the West for Ukraine's war effort.

While there is political support for the idea in principle, some countries want more clarity on the legal and fiscal risks.

The Kremlin has described the proposal as an illegal seizure of Russian property and cautioned there would be retaliation for any theft of Russian assets.