The European Union is rushing to find ways to prop up Ukraine's finances as the war shows no end in sight and the costs mount.

The urgency has escalated as the Trump administration made it clear it will be up to Europe to foot the bill for the continent's security.

With the US receding, Europeans are now contemplating an audacious plan to use Russia's immobilised assets to issue a €140 billion reparations loan to Ukraine, which could help cover the country's financial and military needs for 2026 and 2027.

The plan, however, is facing obstacles.

Belgium, which hosts the assets, hit the brakes on it during an EU summit this week, citing its legal ramifications as well as the threat of retaliation from Russia. Still, Europeans are clear they – and their taxpayers – do not want to pay for the destruction caused by Russia, so there is little alternative.

They agree on the what – now they need a how.

Here's what you should know about the reparations loan.

How did we get here?

In the first week of Russia's full-scale invasion of Ukraine in early 2022, the EU, together with its G7 allies, applied unprecedented sanctions on the Kremlin.

Among those was a sweeping decision to immobilise the assets of the Russian Central Bank held in the West to quash Moscow's ability to finance the war.

For the EU, this represented €210 billion in economic and political leverage over Russia, as the bulk of the assets are held at Euroclear, a central securities depository in Brussels.