The European Commission proposes using Russian funds subject to sanctions to support Ukraine without permanently taking over the cashbecause these funds are held by the Brussels financial company Euroclear.
Belgium is reluctant to support this plan. Prime Minister Bart De Wever fears his government will have to repay billions to Moscow if the Kremlin's army of lawyers sues over the initiative. During the October meeting of EU leaders, De Wever demanded stronger guarantees from them to protect his country against the financial and legal risks that may arise if the EC plan comes into force.
Ukraine is eagerly waiting for the results. The money must arrive by spring. Otherwise, Moscow will be able to follow suit and celebrate further successes on the front, tightening the noose around Kiev's neck. The lack of a decision is grist for Vladimir Putin's mill.
— How are we supposed to save EUR 140 billion at this time of year? [596 mld zł] from European budgets? It's impossible, says one of the deputy finance ministers of an EU country, frustrated with the actions Belgium, which sets three tough conditions to support the EC's plan.
Friday's meeting is the result of Tuesday's lack of agreement between the deputy finance ministers. There is no progress in negotiations regarding a reparation loan [pożyczki w wysokości 140 mld euro, która ma być wypłacona z zamrożonych rosyjskich aktywów, wspierając odbudowę kraju]and the Commission warns that time is running out.
— The longer we wait, the more difficult this task will be. This may raise questions about possible bridging solutions, says Valdis Dombrovskis, EU Commissioner for the Economy.
If the money does not arrive by spring, Ukraine will face a huge budget deficit next year.
Without an agreement on the use of Russian assets, the Commission is warning EU governments that they will have to support Kiev from their own pocketbooks – and after a devastating pandemic that has devastated national budgets, there is little desire to do so.
— How are we supposed to save EUR 140 billion at this time of year? [596 mld zł] from European budgets? – asks one of the deputy finance ministers of an EU country, frustrated by Belgium's actions. -It's impossible.
The Commission will present a memorandum to Belgium on alternative financing options for Ukraine, which include EU loans. It's possible that De Wever, who also has financial constraints, will step down when he sees he has no other viable options.
What does Belgium want?
For his part, De Wever outlined the conditions that would have to be met for Belgium to support the plan.
Firstly, Belgium wants to eliminate the threat of Hungary's veto — or another country — on sanctions.
Every six months, the EU must unanimously reapprove sanctions against Russia, meaning any Kremlin-friendly country, such as Hungary or Slovakia, could unfreeze Russian assets and force Euroclear to transfer all sanctioned funds back to the Kremlin.
The Commission is working to override the veto to give Belgium the long-term certainty it needs on this issue.
Secondly, Belgium wants other EU countries to share the risk.
The commission has repeatedly said that Ukraine will have to start repaying the loan of EUR 140 billion only when Russia ends the war and pays compensation. But the Belgians want EU capitals to provide financial guarantees for the loan if Russia ends the war and demands the return of its assets — or if Kremlin lawyers convince a court that Moscow should get its money back.
Even if all EU countries provide national guarantees, Belgium wants to ensure that any such payments are immediate. The commission suggested that it could lend money to any country that had difficulty securing cash at short notice. However, this approach would increase the country's debt, an unpopular prospect for countries such as France and Italy.
Finally – thirdly – Belgium urges the Commission to consider using the current seven-year EU budget to guarantee the loanrather than relying on national governments.
Theoretically, the Commission could use part of the cash reserve, known as the margin, set aside in the EU budget for this purpose. This idea makes sense once the new budget is announced in 2028. However, it is unclear whether the current cash reserve is sufficient.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
