Von der Leyen previews new sanctions on Russia and new loan for Ukraine

A great many topics populated Ursula von der Leyen's 73-minute-long State of the European Union speech on Wednesday morning, from irregular migration and natural disasters to online disinformation and green mobility.

But it was Russia's full-scale invasion of Ukraine that set the scene.

"Europe is in a fight," the president of the European Commission said at the very start of her address. "A fight for a continent that is whole and at peace."

Von der Leyen then presented a series of new measures to tighten the screws on the Kremlin and ramp up assistance for Ukraine, two interlinked efforts that have gained a new sense of urgency in light of Donald Trump's unpredictable diplomacy.

Here's an overview of what she announced.

Fresh sanctions

The next round of EU sanctions against Russia will continue the crackdown on the "shadow fleet", which Moscow uses to bypass the price cap on seaborne oil, and "third countries" that enable the circumvention of economic restrictions, von der Leyen said.

She noted the Commission was "looking" into the idea of speeding up the phase-out of Russian energy, which the bloc, despite more than three years of brutal war, continues to buy. Last year, the EU spent an estimated €23 billion on Russian fossil fuels.

In spring, the Commission presented a roadmap to end all purchases by the end of 2027 at the very latest. Given that the plan is barely a few months old and is still on the table of legislators, it is remarkable to see von der Leyen already pitching an amendment.

The reason most likely lies in the White House.

Recent media reports indicate that Trump is piling extra pressure on Europeans to cut off energy ties with Moscow and apply secondary tariffs on China and India, the largest clients of Russian crude oil. As it happens, the maximalist request runs counter to the position of the two most Trump-friendly member states, Hungary and Slovakia, who have spent the last few months vociferously complaining about the phase-out.

Moreover, von der Leyen said the 19th package of EU sanctions was being prepared "in coordination with partners", another reference to Washington.

Last week, she held a phone call with US Vice President JD Vance to ensure a "unified front on sanctions". And this week, David O'Sullivan, the EU's sanctions envoy, flew to Washington and met with US Treasury Secretary Scott Bessent.

"All options remain on the table as part of (Trump's) strategy to support peace negotiations. Business as usual has not worked," Bessent said after the meeting.

"We are willing to take strong measures against Russia, but our European partners must fully join us in this to be successful."

Bessent's remark raised eyebrows: the US has yet to slap fresh sanctions on Russia.

Reparations loan

Von der Leyen brought up a hot topic of discussion: Russia's frozen assets.

In the early days of the war, Western allies moved quickly to immobilise the deposits held by the Russian Central Bank. The EU holds the greatest share, worth €210 billion.

The enormous sum has fuelled relentless calls for the money to be confiscated and transferred directly to Ukraine, which faces ever-rising budgetary and reconstruction costs. But confiscating sovereign assets raises questions under international law and member states fear the associated risks to the bloc's financial stability and credibility.

Instead, the Commission has worked to capture the windfall profits generated by the assets, using them to finance an extraordinary G7 loan worth $50 billion.

Building on this template, von der Leyen wants to issue another loan.

"This is Russia's war. And it is Russia that should pay," she told MEPs in Strasbourg.

"With the cash balances associated to these Russian assets, we can provide Ukraine with a Reparations Loan. The assets themselves will not be touched, and the risk will have to be carried collectively," she went on.

"Ukraine will only pay back the loan once Russia pays for the reparations. The money will help Ukraine already today."

It's unclear how much the new loan will be worth and what model the Commission will use to maximise the windfall profits, which are needed for the previous G7 plan.

Drone alliance

In parallel with financial support, the EU will ramp up military aid, von der Leyen said.

To this end, she pitched a new programme called "Qualitative Military Edge" that will channel investment in the capabilities needed by the Ukrainian armed forces, which Western allies want to build into the first line of future security guarantees.

Additionally, she unveiled a "Drone Alliance" between Ukraine and the bloc. The project is meant to boost Ukraine's high-tech edge in the sector, crucial for its resistance against Russia's invasion, by leveraging the EU manufacturing capability.

Brussels will provide €6 billion from the G7 loan to kick-start the alliance.

"Ukraine has the ingenuity. What it needs now is scale," she said. "And together, we can provide it: so that Ukraine keeps its edge, and Europe strengthens its own."

Von der Leyen also spoke of an upcoming summit dedicated to the return of Ukrainian children abducted by Russian forces, a war crime for which Vladimir Putin is wanted. In August, she personally discussed the issue with Trump at the White House.

"With nearly 20,000 abducted Ukrainian children, this war has become a deeply personal tragedy for thousands of families torn apart. We must do everything to bring everyone back," Ukrainian President Volodymyr Zelenskyy said in reaction to the speech.

"We see eye to eye: Ukraine's security is Europe's security. Together – Ukraine, Europe, the US, G7 – we can achieve lasting, guaranteed peace for our entire continent."