Ursula von der Leyen has placed cards on the table – and a deadline.
In a letter addressed to the 27 leaders of the European Union, the president of the European Commission has outlined the three main options that the bloc has at its disposal to support Ukraine’s financial and military needs for the next two years.
The document, seen by Euronews, dissects the pros and cons of each option and injects a sense of urgency into the talks ahead of a key summit in December.
“The options presented in this note are stark – both in their design and in their implications. Clearly, there are no easy options,” von der Leyen says.
“Europe cannot afford paralysis, either by hesitation or by the search for perfect or simple solutions which do not exist.”
This is what we learned from the much-anticipated options paper.
Staggering numbers
Von der Leyen’s 12-page letter shows the enormous assistance that Ukraine will require next year and 2027 to continue fighting against Russia’s full-scale invasion.
The European Commission estimates €83.4 billion for Ukraine’s armed forces and €55.2 billion to run the economy, amounting to €135 billion in the next two years.
For comparison, since the start of Russia’s war in February 2022, the bloc has provided €66 billion in military aid and €100.6 billion in financial support, plus €3.7 billion from the windfall profits of the immobilised Russian assets.
This means that, in the next two years, the EU will contribute nearly as much as it has done in almost four years.
The increase is directly correlated to Donald Trump’s return to the White House. The US administration has cut out most of its direct assistance, including its large donations of weapons and ammunition under President Joe Biden.
Now, the EU is left picking up the tab – with some help from Western allies, such as the UK, Norway, Canada and Japan. Still, the bulk of the effort will come from Europe.
“As Russia’s aggression continues and the costs of war mount, Ukraine’s financial resilience is eroding,” von der Leyen writes. “Without sustained and scaled-up support in 2026 and beyond, Ukraine seriously risks economic impasse, undermining its capacity to defend itself and maintain essential state functions.”
Credible, but costly, borrowing
The first two options in the paper boil down to fresh debt.
Option 1 would be non-repayable grants provided at the national level, and Option 2 would be the same but done collectively at the EU level. Option 1 would have a voluntary character, while Option 2 would involve all member states once approved.
Both options would require going to the financial markets and raising fresh money, which is a problem for member states facing a large national deficit.
Doing so would be relatively straightforward, von der Leyen says, but it would have an immediate fiscal impact because the grants would count in the balance sheets of member states, which would have to cover the principal and associated interest.
Under the option of joint debt, the underwriting of funding would be pegged to the economic size of each member state, and they would have to pay interests on it too. If one or more countries decided to pull out of the scheme, the rest would have to step up and make up for the difference.
Additionally, von der Leyen warns, joint debt would take place at “already extremely busy period” and would have to be “carefully managed” to obtain the best borrowing rates in the market. (The bloc has not yet started repayments of the COVID-19 recovery fund.)
Options 1 and 2 could use the bloc’s common budget as an extra guarantee. However, current budget rules forbid borrowing for a non-EU country. Amending the legislation would need unanimity, a tall order given Hungary’s opposition to supporting Ukraine.
Searching for the missing Russian assets
The loan would be based on the assets of the Russian Central Bank, which have been immobilised since the early days of the war. The bulk of the assets, worth about €185 billion, is held at Euroclear, a central securities depository in Brussels.
Under the untested scheme, Euroclear would transfer the cash balances to the Commission, which would then issue a €140 billion loan to Ukraine on behalf of the union. (The remaining €45 billion would cover an ongoing G7 line of credit.)
Ukraine would be asked to repay the loan only after Russia ends its war of aggression and agrees to compensate for the damages caused. After that, the Commission would repay Euroclear, and Euroclear would repay Russia, completing the circle.
Since the idea was first pitched in September, Belgium, the prime guardian of the assets, has complained about being the only country on the front line and demanded total transparency to locate all the available assets. After all, the Commission has repeatedly said there are about €210 billion in Russian sovereign assets across the bloc.
“The fattest chicken is in Belgium, but there are other chickens around,” Belgian Prime Minister Bart De Waver said last month. “Nobody ever talks about this.”
In her letter, von der Leyen opens the door for using the remaining €25 billion, whose exact location remains shrouded in secrecy. This means the reparations loan could exceed the initial €140 billion figure and therefore last longer.
But von der Leyen is quick to note that the €25 billion is kept in “commercial banks”, which might object to granting access to private accounts.
Forever guarantees
In her letter, von der Leyen spends considerable space trying to placate the Belgian concerns. Coincidentally, the document was shared three days after she met De Wever.
The Belgian government is deeply concerned about the prospect of a multi-billion-euro lawsuit launched by Moscow. The two countries are bound by a 1989 investment treaty that foresees arbitration in case of a dispute. A similar treaty has been used by a Russian oligarch to mount a €14 billion legal challenge in Luxembourg.
As a first step, von der Leyen suggests Belgium withdraw from the treaty.
Then, she calls on member states to provide “legally binding, unconditional, irrevocable and on demand guarantees” to cover not only the €185 billion from the assets themselves but also any potential arbitral rewards.
The guarantees would need to be fully ready in case the sanctions that have immobilised the assets are lifted before the war ends and Moscow agrees to pay reparations. Von der Leyen hints at a possible switch from unanimity to qualified majority voting, even if a similar attempt was tried last year but blocked by Hungary.
The uncertainty over legal challenges and the sanctions renewal means that the guarantees provided by member states might last “forever”, von der Leyen admits.
Knock-on effects
In the strictest sense, the reparations loan would fall short of confiscating sovereign assets, which is strictly forbidden under international law, because Russia would have the chance to recover its funds if it compensates for the havoc it has wreaked.
Still, von der Leyen acknowledges that others might not share her view. Foreign investors might see the initiative as straight-up confiscation and flee from the eurozone,
“It cannot be discounted that there are potential knock-on effects, including for financial markets,” she writes. “A concerted effort by the Union, and possibly international partners, to counteract such perception would need to be made.”
If the other G7 partners, which hold a smaller share of the Russian assets, mimic the reparations loan, the reputational risk can be “further reduced”, she adds.
While the UK and Canada have expressed interest in replicating the unprecedented scheme, the US and Japan have been more circumspect.
The importance of convincing Western allies was highlighted by Christine Lagarde, the president of the European Central Bank, when she met EU leaders in October. De Wever picked up on her advice to say: “It would be good not to do it alone.”
Make or break
Whatever option is chosen, it must be chosen fast, von der Leyen stresses in her letter.
“Speed is of the essence,” she writes at one point.
Ukraine will need a fresh injection of foreign assistance in the second quarter of 2026. The first quarter of 2026 is expected to be met by other Western partners, but after that, the responsibility will fall squarely on the EU’s shoulders.
If that was not motivation enough, von der Leyen reminds leaders that the IMF is set to decide on a new assistance programme for Ukraine in either December or January. For Kyiv to obtain a positive response, it needs to demonstrate a “firm commitment” to keep its finances running – something that only European aid can vouch for.
This means that EU leaders must make a decision when they meet in Brussels on 18-19 December for a make-or-break summit.
If the Belgian concerns prove insurmountable and the debate on the reparations loan drags on, the bloc could deploy Option 1 or Option 2, or a mix of both, as “bridging solutions” to avoid a sudden cut-off in aid.
“Ultimately, what plays out in Ukraine is as fundamental to the country itself as it is to the future of Europe as a whole,” von der Leyen says.
