Germany’s Merz backs using frozen Russian assets to support Ukraine

German Chancellor Friedrich Merz is in favour of using some €140 billion ($163.5 billion) in frozen Russian assets in Europe to provide an interest-free loan to Ukraine, the Financial Times reported on Thursday.

“That loan would only be repaid once Russia has compensated Ukraine for the damage it has caused during this war,” Merz writes in the article.

The step would free EU member states from funding a large part of support for Ukraine needed in the near future themselves, according to the chancellor.

“Under Merz’s proposal, the loan would first be guaranteed by member states before being collateralised using money from the EU’s next long-term budget in 2028,” the Financial Times reported.

The funds could secure Ukraine’s defence capabilities for several years, according to the chancellor, who said he intends to raise the proposal at next week’s informal EU summit in Copenhagen.

“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,” Merz said.

According to the European Commission, around €200 billion in assets of the Russian Central Bank has been frozen in the European Union due to Russian invasion of Ukraine.

The interest generated by those assets is already being used to fund weapons and ammunition for Ukraine.