Germany Proposes €140B Loan from Frozen Russian Assets

German Chancellor Friedrich Merz urged the EU to mobilize roughly €140 billion in frozen Russian central-bank assets to provide an interest-free loan to finance Ukraine’s military procurement, marking a reversal of Berlin’s prior reluctance. He proposed legal and financial structures — initial guarantees by member states with eventual backing from the EU’s long-term budget — that would keep the assets frozen and avoid outright confiscation until Russia compensates Ukraine. The proposal echoes European Commission “reparations” loan ideas and is pitched as a way to shore up Ukraine’s battlefield resilience amid dwindling funds and concerns about U.S. disengagement. Critics, including French President Emmanuel Macron and legal and central-bank officials, warn of international-law, judicial-liability and reserve-currency risks, and analysts caution about diplomatic and economic blowback; the Kremlin has warned of retaliation. The plan has reignited debates across the EU and is expected to be a focal point at upcoming EU meetings as leaders seek a legally viable way to fund Kyiv without directly seizing assets.