Merz proposes major Ukraine loan using frozen Russian assets

German Chancellor Friedrich Merz has proposed providing Ukraine with a €140 billion ($164 billion) loan backed by frozen Russian assets, aiming to strengthen Kyiv's military capabilities and potentially bring Moscow to negotiations.

The plan, outlined in a guest op-ed published Thursday by The Financial Times, would leverage Russian Central Bank assets currently frozen in Europe without technically confiscating them — addressing legal concerns while creating substantial financial support for Ukraine.

"In my view a viable solution should now be developed whereby — without intervening in property rights — we can make available to Ukraine an interest-free loan of almost €140 billion in total," Merz wrote in the piece. "That loan would only be repaid once Russia has compensated Ukraine for the damage it has caused during this war."

Merz stressed that the initiative is designed not to extend the conflict but to end it by demonstrating Western resolve. "We must systematically and massively raise the costs of Russia's aggression. Moscow will only come to the table to discuss a ceasefire when it realizes that Ukraine has greater staying power," he wrote.

Under the plan, EU member states would provide budgetary guarantees until 2028, after which they would be replaced by collateral from the EU's long-term budget. Merz plans to present this proposal at next week's informal EU leaders summit in Copenhagen, with the goal of reaching a formal decision by the end of October.

The chancellor specifically noted that the funds would be solely used to finance Ukraine's military equipment, not for general budgetary purposes.

"In my view, such a comprehensive program must also help to strengthen and expand the European defense industry. That would serve both our collective security and European sovereignty," he added.

Merz called for unanimous European support for his proposal while also suggesting that countries worldwide with frozen Russian assets could join the initiative. He noted that Germany would coordinate these efforts closely with G7 partners.

The chancellor concluded the piece with a call to action. "In recent days we have been reminded of how comprehensively and systematically peace and freedom in Europe are under threat. As Europeans we hold powerful means to resist that threat," he said. "The time has come to use them, so that we may defend our secure, free and united Europe."