Major European powers have voiced support for a proposal to use frozen Russian assets as collateral for an enormous loan to Ukraine to fund its reconstruction.

The so-called Reparations Loan, first outlined by European Commission President Ursula von der Leyen in mid-September, would leverage Russian funds frozen in European banks to back a 140 billion euro ($164.4bn) loan for Ukraine guaranteed by European Union member states. Under the plan, Kyiv would not need to repay the loan until Russia covers the costs of war reparations.

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While some EU states have raised concerns over the legality and risk-sharing aspects of the scheme, support appeared to build on Wednesday at an EU summit in Denmark, Copenhagen. Finnish Prime Minister Petteri Orpo, Swedish Prime Minister Ulf Kristersson and Estonian Prime Minister Kristen Michal all endorsed using seized Russian funds to support Ukraine.

Dutch Prime Minister Dick Schoof and French President Emmanuel Macron indicated they were open to such plans, provided legal and financial risks are addressed.

EU foreign policy chief Kaja Kallas said that despite some divergence within the bloc, the EU was working quickly to reach an agreement.

“If we don’t take these [Russian] assets into account, then it is on our taxpayers. That’s for sure,” Kallas told reporters on the sidelines of the summit.

‘Illegal seizure of Russian property’

The Kremlin has denounced the proposed Reparations Loan, saying any use of frozen Russian funds for this purpose would be “pure theft”.

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“We are talking about plans for the illegal seizure of Russian property. In Russian, we call that simply theft,” Kremlin spokesman Dmitry Peskov told reporters on Wednesday. He warned that anyone who misappropriated Russia’s assets or the income they generate “will be prosecuted in one way or another” and “called to account”.

Peskov also claimed such actions would erode confidence in Europe’s financial institutions. “The boomerang will very seriously hit those who are the main depositories, countries that are interested in investment attractiveness,” he said.

A World Bank study this year estimated that as of December 2024, Ukraine’s reconstruction would cost $524bn over the next decade – about 2.8 times its gross domestic product for that year.

There are about $300bn in frozen Russian assets, including 210 billion euros ($247bn) held in Europe. Of that, 185 billion euros ($217bn) is in Euroclear, a Brussels-based central securities depository.