Ukraine’s allies are working on another option for financing aid – a “reparation loan.”

In addition to confiscating Russian assets or lending money to Kyiv using these assets, there is a third option – a so-called reparation loan. Under this approach, Ukraine could borrow money from its allies, including G7 members, and pledge its reparations or compensation claim against Russia as security. This would give Kyiv access to much more money than it would have by using the profits from Russian assets.

“Ukraine has the right to demand reparations from Russia, and it would monetize a part of this demand by pledging it to secure a loan from the G7,” said Lee C. Buchheit, an honorary professor at the School of Law at the University of Edinburgh.

If Russia does not pay reparations, the G7 can use the pool of frozen assets to recoup its loan to Ukraine. This mechanism ensures Russia will cover part of the $486B bill for Ukraine’s recovery.

“If there is no regime change in Russia, Putin will never pay reparations. This $300B is probably the only contribution Russia will ever make to reparations”, added Buchheit.