German Chancellor Friedrich Merz is advocating for the European Union to unlock up to 140 billion euros ($A249 billion) in frozen Russian assets to finance Ukraine's war effort, marking the first public expression of support at this level from Germany for such a move.

The proposal of an interest-free EU loan, outlined in a Financial Times editorial, aims to provide long-term support for Ukraine without violating property rights.

The assets would remain frozen until Russia pays reparations for the war, Merz suggested, addressing longstanding legal and financial concerns that had previously made Germany and other EU states wary of confiscating Russian assets.

Under the plan, the loan would initially be guaranteed by member states and later backed by the EU's long-term budget from 2028.

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