Merz calls on EU to use frozen Russian assets for Ukraine defense loan
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German Chancellor Friedrich Merz called on the European Union to use frozen Russian assets to provide Ukraine with an interest-free loan worth about $160 billion (140 billion euros), securing Kyiv's defense capabilities for years to come.
Writing in the Financial Times on Sept. 25, Merz said he is "advocating the mobilization of financial resources on a scale that will secure Ukraine's military resilience for several years," marking a reversal of Berlin's earlier skepticism about using frozen Russian assets.
EU governments, including Germany, have long resisted using frozen Russian funds, citing financial and legal risks and warning that such a move could undermine confidence in the euro as a reserve currency and provoke further escalation from Moscow.
Merz acknowledged those concerns, noting that Germany "has been, and remains, cautious on the issue of confiscating the Russian central bank's assets." He said there are "not only questions of international law to consider, but also fundamental issues concerning the euro's role as a global reserve currency."
He argued that the EU must not allow those worries to block action: "We must consider how, by circumventing these problems, we can make these funds available for the defense of Ukraine," he wrote.
Under Merz's plan, Ukraine would receive an interest-free loan backed by frozen Russian assets. The loan, he said, would only be repaid once Moscow compensates Kyiv for wartime damages. "Until then, the Russian assets will remain frozen, as decided by the European Council."
Merz framed the proposal as a way to raise the stakes for Moscow. "We must systematically and massively raise the costs of Russia's aggression," he wrote, adding that Europe needs "a new impetus to change Russia's calculations" and "an effective lever that will disrupt the Russian president's cynical game of buying time and bring him to the negotiating table."
He also stressed the funds should should bolster Europe's defense, calling it an investment in both "collective security and European sovereignty."
Merz's proposal comes at a time of heightened tensions between Russia and NATO's European members. In the past month, Russian aircraft have repeatedly violated NATO airspace, underscoring the risks of escalation as Moscow's war in Ukraine grinds on.
