Ukraine opposes EU conditions for loan secured by money from frozen Russian assets. Claims “subversion of the principle of justice”

Ukraine is urging European countries not to limit the use of a proposed $163 billion loan secured by frozen Russian state assets, arguing it needs it to buy non-European weapons, repair war damage caused by Russian attacks and compensate victims, Reuters reported on Wednesday.

As EU leaders discuss a “loan for repairs” to Kiev on Thursday, in talks that will also include Ukraine's president, some states are suggesting the funds be spent mainly on European-made weapons to boost their defense industries amid growing threats from Russia.

A senior official in President Volodymyr Zelenskiy's administration told Reuters that Ukraine needs the funds by the end of the year and autonomy over how to spend them, one of the first public statements detailing Kiev's position.

“Ukraine's position is that any kind of conditioning undermines the principle of justice. Therefore, the victim, and not donors or partners, must determine how to meet his most urgent needs for defense, recovery and reparations,” said Irina Mudra, a senior legal adviser in the Zelenskiy administration, in an interview with the news agency.

American weapons, essential for the Ukrainian defense

US-made Patriot air defense systems, for example, have been crucial to Ukraine's ability to shoot down volleys of Russian ballistic missiles that have targeted military targets, power plants and destroyed civilian buildings.

In her comments, which come at a crucial moment in the deliberations within the EU, Mudra stated that Ukraine supports cooperation with European defense industries and is already finalizing agreements with the largest industrial companies in Europe.

“But we will insist on autonomy in the allocation of defense resources – if European countries do not have sufficient defense capabilities, then we must be able to acquire them from non-European countries,” she said.

The adviser added that part of the loan must go to “urgent reconstruction needs”, such as Ukraine's critical energy infrastructure, which has been hit by Russian bombing. Also, another part of the loan should be allocated, “to a prudent extent”, to compensate the victims.

According to a European Commission document consulted by the news agency, some European states want the funds to go mainly to European-made weapons, while others say there must be flexibility.

As a compromise, the Commission suggested that the majority of the loan be spent on Ukrainian and European arms, but a smaller part be earmarked for general budget support, which Kiev could also use to buy arms from outside Europe.

The importance of Thursday's summit

Earlier this month, European leaders expressed broad support for Russian assets frozen in the West to be used to provide Ukraine with a 140 billion euro ($163 billion) loan.

EU diplomats say numerous legal and technical challenges need to be addressed, particularly to appease Belgium, the country that holds the Russian assets to be used for Ukraine in its Euroclear securities depository.

But senior EU officials say they hope leaders attending Thursday's summit in Brussels will give the go-ahead for further efforts to support the idea, with a view to the European Commission drawing up a formal legislative proposal.

The Kremlin described the plan as an illegal seizure of Russian property and warned there would be retaliation.

Under international law, sovereign assets cannot be confiscated. The proposal would allow EU governments to lend Ukraine these funds, and Kiev would repay them once it receives war reparations from Russia as part of a possible peace deal.

Supporting Ukraine has become more difficult for Europe, which is facing fiscal hardship and has had to shoulder a greater burden since Donald Trump returned to the White House in January. The American president has made it clear that no new US-funded assistance (military or otherwise) is foreseen.

Ukraine has yet to find funding to cover an $18 billion shortfall in its 2026 budget, according to Kyiv's finance ministry.

“We would really like to convince our allies that the reparations loan from the EU must be operational by the end of 2025 to avoid this funding shortfall and ensure the continuity of military and macro-financial support,” Mudra said.

Failure to do so would mean Ukraine risks entering next year without predictable sources of funding, the legal counsel added.