The paper was circulated to EU capitals following last month’s failure to reach consensus on the so-called “reparations loan” of around €140 billion ($160 billion), the FT reported on Friday.

Without tapping Moscow’s immobilized central bank reserves, the EU would need to either authorize joint borrowing or issue direct grants – both of which would “directly affect” national budgets and increase public debt, the Commission warned. It remains unclear whether the option of not bankrolling Kiev was even considered.

The potential cost to EU economies is substantial, as servicing a collective loan of that size could result in up to €5.6 billion in annual interest payments. The Commission cautioned that borrowing at such a scale could also raise general EU borrowing costs and undermine other financial instruments.

Kiev expects its Western backers to cover a nearly $50 billion deficit next year, with its 2026 draft budget projecting some $114 billion in spending and only $68 billion in revenue – nearly all of which is earmarked for military purposes. Most non-military government expenses, including salaries, pensions, healthcare, and education, will rely entirely on foreign aid.

Belgium continues to oppose the use of Russian assets as loan collateral, citing serious financial and reputational risks. The frozen funds, totaling around $300 billion globally, with roughly $200 billion held at Belgium’s Euroclear, are technically not confiscated and could be reclaimed by Moscow if EU sanctions are not continually renewed. The EU has already stretched legal definitions by classifying the interest generated on these frozen funds as windfall profits not belonging to Moscow, and using them to arm Kiev.

The new plan hinges on the assumption that Moscow will eventually repay the loan as part of a future peace settlement – an outcome Belgian Prime Minister Bart De Wever has described as improbable. On Friday, EU Commission officials once again failed to convince Belgium to back the asset seizure.

Moscow has repeatedly said it would regard any use of its frozen assets as theft, and could retaliate by seizing €200 billion ($172 billion) in Western assets held in Russia by foreign governments and companies.

The move follows an assessment that Russia’s war against Ukraine has notably increased security risks connected to Russian visa applicants, including a potential misuse for espionage, sabotage, or propaganda.

Exemptions may be applied in humanitarian cases, such as those involving dissidents, journalists, human rights defenders, and their families.

Family members of EU citizens, Russian citizens who are legally residing in the EU, and certain professionals, such as transportation workers, may also be exempt.

“The EU is tightening visa rules for Russian nationals amid continued drone disruptions and sabotage on European soil,” top EU diplomat Kaja Kallas said.

“Travelling to the EU is a privilege, not a given.”

The EU also announced that visa applications by Russian nationals must be “scrutinised thoroughly and frequently” in order to “mitigate threats to public policy or internal security.”

The Russian Foreign Ministry denounced the move, with spokesperson Maria Zakharova commenting that Europe apparently does not need “wealthy tourists” when it has “migrants” and “draft dodgers” from Ukraine.

Since the outbreak of Russia’s full-scale invasion of Ukraine in 2022, the European Union has tightened entry rules for Russian citizens.

However, issuing visas remains the prerogative of individual member states, so the EU cannot impose a complete ban on Russian entry.

The EU is also reportedly planning to limit the movement of Russian diplomats in response to espionage and sabotage linked to Moscow.

European governments have been raising alarm over a surge in hybrid operations targeting Ukraine’s partners in the EU and NATO, including arson, cyberattacks, infrastructure sabotage, and drone incursions.

Western intelligence agencies have blamed Moscow-backed operatives, many of whom reportedly work under diplomatic cover, for coordinating these provocations.