Could Ukraine's Reparations Loan End The EU's Paralysing Foreign Policy Veto?

[Celerity]

A €140 billion loan secured against frozen Russian assets may force Europe to abandon unanimity voting—and finally give the EU real geopolitical power.

https://www.socialeurope.eu/could-ukraines-reparations-loan-end-the-eus-paralysing-foreign-policy-veto



On 1 October in Copenhagen, EU heads of state and government discussed a proposal that could fundamentally transform European foreign policy. The €140 billion “reparations loan” to Ukraine, announced by Ursula von der Leyen on 9 September during her State of the Union address, represents more than emergency wartime financing. To bypass Hungary’s inevitable veto, the loan’s terms could be decided by qualified majority within the Council of the European Union—potentially ending decades of paralysis caused by the unanimity rule in common foreign and security policy.

The loan would be secured against approximately €185 billion in Russian assets frozen at Euroclear, the European clearing house in Brussels. This mechanism effectively mobilises these funds without direct expropriation—a crucial distinction for European governments worried that outright seizure would undermine the euro’s attractiveness as a reserve currency. Ukraine would only repay the loan once Russia pays reparations, with the money financing both military operations and essential budgetary needs.

Doubling support without taxpayer burden

This loan offers the EU an extraordinary opportunity: nearly doubling European aid to Ukraine without adding a single euro to already stretched national budgets. Since 2022, Europeans have provided €167 billion in support, according to the Kiel Institute. Yet American financial aid has been frozen for months, with no prospect of release in sight. The need for European action has never been more urgent.

The obstacle, predictably, is Hungarian Prime Minister Viktor Orbán. For nearly four years, he has systematically obstructed European support for Ukraine, extracting costly concessions through lengthy negotiations before occasionally relenting. His most damaging success has been completely paralysing the European Peace Facility’s military aid programme. Six billion euros earmarked for Ukraine remain undisbursed after more than a year, leaving only bilateral national assistance in the military sphere.

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