Listen: EU leaders greenlight new Russia sanctions and debate Ukraine reparation loan

EU leaders gathered in Brussels on Thursday (23 October) to discuss matters ranging from defence and housing to climate targets, but the agenda is clearly topped by Ukraine.

Two big items stand out, the so-called “reparation loan” using frozen Russian assets, and the EU’s 19th sanctions package against Moscow, which was greenlit this morning.

But can Europe turn political agreement into real financial support for Kyiv without crossing legal red lines?

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Long Story Short” hosted by Evi Kiorri. The podcast is available on all major platforms.

You can find the transcript here if you prefer reading:

EU leaders gathered in Brussels today, Thursday, to discuss matters ranging from defence and housing to climate targets, but the agenda is clearly topped by Ukraine.

Two big items stand out, the so-called “reparation loan” using frozen Russian assets, and the EU’s 19th sanctions package against Moscow. But can Europe turn political agreement into real financial support for Kyiv without crossing legal red lines?

Leaders are expected to task the European Commission with drafting a concrete plan for using frozen Russian sovereign assets to support Kyiv’s war effort, a plan worth around €140bn.

The idea, first floated by Commission president Ursula von der Leyen, is to channel the profits from immobilised Russian central bank assets, most of which are held in Belgium’s Euroclear into a loan to finance Ukraine’s military and budgetary needs.

The rationale is simple, if Russia destroyed Ukraine, then Russia should pay for rebuilding it.

But there’s a problem. Belgium’s prime minister Bart De Wever has warned he’ll block the plan unless all EU countries share the legal and financial risks. He argues that without full guarantees, the scheme could expose Euroclear to lawsuits and even undermine the euro’s credibility.

He’s not alone. The European Central Bank has also raised concerns, warning that using sovereign assets could violate international law and set a dangerous precedent.

Still, supporters like Germany, France and the Baltic states say the loan is not only legal but moral, a way to make Russia pay, without asking already stretched EU taxpayers for more money.

Meanwhile, EU leaders are also set to approve the 19th package of sanctions against Russia, this time targeting Moscow’s liquefied natural gas exports, its key revenue streams, and expanding travel restrictions for Russian diplomats.

It’s one of the fastest-agreed sanctions packages so far. With Slovakia lifting its veto last night, the EU will, for the first time, impose sanctions on Russian liquefied natural gas.

Across the Atlantic, the US also announced new measures targeting Russia’s two largest oil companies, in response to Moscow’s continued refusal to sit at the negotiating table.

Now, Ukraine is facing an estimated €55bn budget shortfall over the next two years, while Russian air strikes continue to damage energy infrastructure and vital services.

The proposed loan aims to provide stable and predictable funding to help Kyiv maintain essential government functions and support its defence effort.

For the European Union, the issue is not just financial, it’s legal and institutional because of the non compliance with international law.

So this debate highlights a difficult balance for the EU, finding a mechanism that is both legally sound and politically credible, while ensuring that Ukraine receives the financial support it urgently needs.

So, what’s next?

For now, EU leaders are expected to agree on the political direction, to move ahead with the plan, but the technical and legal details will take months to finalise. The European Commission will be asked to draft binding proposals, while member states continue to debate exactly how the money should be used, whether strictly for military aid, or also for rebuilding Ukraine’s infrastructure and economy.

In the meantime, president Volodymyr Zelenskyy, who’s in Brussels today, continues to remind European leaders what’s at stake, which is not just Ukraine’s future, but Europe’s.

And as new US sanctions target Russia’s oil sector, the EU’s message to Moscow is clear, at least on paper, that the economic pressure isn’t going away.