Brussels: The European Union on Wednesday revealed details of its plan to use billions of euros in frozen Russian assets to fund Ukraine’s needs over the<\/b>
\nBrussels: The European Union on Wednesday revealed details of its plan to use billions of euros in frozen Russian assets to fund Ukraine\u2019s needs over the next two years, but Belgium rejected the scheme and insisted that it poses major financial and legal risks.
European Commission President Ursula von der Leyen said that the EU would cover two-thirds of Ukraine\u2019s financial and military needs for 2026 and 2027, which the International Monetary Fund puts at 137 billion euros (USD 160 billion), by providing 90 billion euros (USD 105 billion).
She said that other international partners would be called on to cover the remaining third.
\u201cToday, we are sending a very strong message to the Ukrainian people. We are with them for the long haul,\u201d said von der Leyen while rolling out the proposal, which would use Russian money as collateral to fund Ukraine\u2019s economy and war effort through a \u201creparations loan.\u201d
Von der Leyen said that using the frozen assets would strengthen the Ukrainian position at peace negotiations with Russia and the US, but it would also send a message to Moscow that \u201cthe prolongation of the war on their side comes with a high cost for them.\u201d She said that she had informed the Trump administration about the proposal.
EU leaders have committed to funding Ukraine over the next two years, whatever the method. The EU has already poured in over 170 billion euros (USD 197 billion) since the war started in 2022.
Von der Leyen said that if the loan plan didn\u2019t pass muster, the bloc could borrow the money on international markets in a scheme underpinned by its long-term budget. The problem here, though, is that it would require the approval of all 27 member countries, and Hungary has consistently blocked aid to Ukraine.
The biggest pot of ready funds available is through frozen Russian assets. Most of the money is held in Belgium \u2013 around 194 billion euros as of June \u2013 and outside the EU in Japan, with around USD 50 billion, and the US, UK and Canada with lesser amounts. A total of 210 billion euros (USD 245 billion) is held in Europe.
To address Belgian concerns, the commission\u2019s complex proposal includes safeguards to protect EU nations from \u201cpossible retaliation from Russia,\u201d a prohibition of any release of the frozen assets, and a way for the EU to borrow money to \u201cunderpin a loan to Ukraine.\u201d
But Belgian Foreign Minister Maxime Pr\u00e9vot said that his country considers \u201cthe option of the reparations loan the worst of all, as it is risky. It has never been done before.\u201d Russia has described the scheme as \u201ctheft.\u201d
Haltingly reading prepared remarks to reporters at NATO headquarters in Brussels, Pr\u00e9vot urged the EU to borrow the money for Ukraine on international markets. \u201cIt is a well-known, robust and well-established option with predictable parameters,\u201d he said.
\u201cThe reparation loans scheme entails consequential economic, financial and legal risks,\u201d he said, adding that the commission\u2019s proposals do not address Belgium\u2019s concerns. \u201cIt is not acceptable to use the money and leave us alone facing the risks.\u201d
Belgium fears that the Brussels-based financial clearing house holding the frozen assets, Euroclear, could take legal action if Russia challenges any use of the funds or if the move harms its image and business interests.
Pr\u00e9vot said Belgium feels that its concerns are not being heard by its EU partners.
\u201cWe are not seeking to antagonise our partners or Ukraine. We are simply seeking to avoid potential disastrous consequences for a member state that is being asked to show solidarity without being offered the same solidarity in return,\u201d he said.
In essence, the 90 billion euros would not be seized from Russia as such, as Kyiv would refund it once Moscow pays significant reparations for the massive destruction its war has caused. Should Moscow refuse, the assets would remain frozen.
\u201cWe have listened very carefully to Belgium\u2019s concerns, and we have taken almost all of them into account in our proposal,\u201d Von der Leyen said. \u201cWe will share the burden in a fair way, as it is the European way.\u201d
Other EU partners insist that they, too, understand Belgium\u2019s worries.
\u201cWe take Belgium\u2019s concerns seriously,\u201d German Foreign Minister Johann Wadephul told reporters. \u201cThey are justified, but the issue can be resolved. It can be resolved if we are prepared to take responsibility together.\u201d
His Dutch counterpart, David van Weel, underlined that \u201cthese funds are really, really important. We need to support the Ukrainian economy; otherwise, they will have a very tough time next year.\u201d
\u201cWe understand the Belgian concerns, and we are willing to at least make sure that they are not alone in this,\u201d he said. Several EU countries have already agreed to provide financial guarantees should things go wrong.
Belgium has been earning some tax income on the assets, and the interest raised is also being used to fund a loan program for Ukraine, organised by the Group of Seven major world powers.
The European Central Bank is worried that the plan for an EU reparation loan could undermine confidence in the euro single currency on international markets. EU leaders are due to discuss the scheme and Ukraine\u2019s economic and military needs at a summit in Brussels on Dec. 18.
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