The US-drafted Ukraine peace plan could potentially “torpedo” the EU’s attempts to use frozen Russian assets to fund Kiev, the German newspaper Handelsblatt has reported.

The European Commission has been seeking to issue a €140 billion ($160 billion) loan to Kiev secured against Moscow’s immobilized funds held at the Euroclear clearing house in Belgium. The scheme is based on the assumption that Russia will eventually pay reparations to Ukraine, an outcome widely seen as unlikely.

Moscow has said it regards any use of its assets as “theft” and has vowed to challenge it in court. The plan has also faced opposition from Belgium, which has demanded that all EU members share in the financial and legal risks associated with the move.

In its article on Friday, Handelsblatt cited an unnamed high-ranking Belgian official, who said that “new risks for the reparations credit are already emerging. Because the peace plan that emerged this week provides for the immobilized Russian assets to be used differently.”

The American proposal to settle the conflict between Russia and Ukraine “would oblige the EU to reimburse all diverted Russian funds,” according to the official.

The plan has not been officially disclosed, but media reports claimed that it calls for $100 billion out of $300 billion in frozen Russian assets to be allocated for the US-led reconstruction efforts in Ukraine, with the rest invested in joint projects between Washington and Moscow. The White House also reportedly expects Western Europe to contribute another $100 billion to rebuild Ukraine.

Handelsblatt noted that the emergence of the plan has already jeopardized the timetable for the delivery of new financial aid that the EU promised to Kiev and that it “urgently needs.”

The leaders of the EU, Germany, France, Britain, Canada, the Netherlands, Spain, Finland, Italy, Japan and Norway issued a joint statement on the sidelines of the G20 summit on Saturday, saying that the US proposal “includes important elements that will be essential for a just and lasting peace,” but adding that it would “require additional work.”

On Friday, Russian President Vladimir Putin said that the American plan has not yet been discussed “in detail,” but suggested that it could eventually “form the basis of a final peace settlement.”

You can share this story on social media: