EU leaders will meet in Brussels for an extraordinary summit of decisive importance. They will be addressing a key proposal to use frozen Russian assets to directly loan Ukraine tens of billions of euros. The European Commission has recently revealed a blueprint to give €90 billion (£79 billion) to Kyiv over the next two years. This program will help improve the financial stability of Ukraine as the war goes on.
Adopting this decision is critical given Ukraine’s severe fiscal crisis. Without additional aid, the country estimates it will exhaust funds in a matter of months. The claimed total value of Russian assets frozen in the EU is €210 billion (€185 billion, $245 billion). The bulk of these assets are under the control of Euroclear, a Belgium-chartered corporation. Yet for all this new money, including generous proposed grants and loans for the energy transition, many EU member states balked at using this money.
From the very start, Belgian Prime Minister Bart De Wever has led the charge against the plan. He stated in the Belgian parliament that he has not yet encountered any compelling arguments that would persuade him to alter Belgium’s position on the matter. De Wever’s reluctance is emblematic of a larger concern among some EU leaders about the precedent that would be set by loaning these assets to Ukraine.
“I haven’t yet seen any text that would persuade me to change Belgium’s position.” – Bart De Wever
Belgium is still dragging its feet on the subject. At the same time, Hungary’s PM Viktor Orban has rejected any further EU financial support for Ukraine. Reports suggest that Orban and his associates have made attempts to have the proposal regarding frozen Russian assets removed from the summit agenda altogether. Malta, Bulgaria, and the Czech Republic have been equally skeptical to the proposed loan, adding to the EU’s collective headache.
Slovakia’s new Prime Minister Robert Fico has been quite vocal about this. He’s concerned that money could be siphoned off to militarize the response instead of focusing on urgent, life-saving reconstruction efforts. This sentiment echoes a broader apprehension among some member states about the long-term ramifications of using frozen assets in such a manner.
The proposal now requires a unanimous vote from all EU member states. Nonetheless, it can be ratified if just about two-thirds of the states approve it. That creates a whole other layer of difficulty, since dissent from just a handful of countries can stop the whole deal in its tracks.
As those negotiations continue, senior Finnish officials have admitted that the toughest work is still to come. A government representative noted the importance of addressing Belgium’s concerns:
“There are many hiccups and obstacles of course still on the way. We have to find a way to respond to Belgium’s worries.” – Finnish government official
This urgency for action is very real among the EU leaders. Ursula von der Leyen, President of the European Commission, emphasized the pressing nature of the situation, stating:
“We know the urgency. It is acute. We all feel it. We all see it.” – Ursula von der Leyen
The stakes are extremely high, both for Ukraine and for the EU. Russia has sent unequivocal and fierce warnings regarding any attempts to use its frozen assets for Ukrainian projects. Fitch Ratings has put Euroclear on negative watch. They complement this decision with the argumentation that legal risks related to the European Commission’s initiatives on Russian funds are “low.”
Belgium would risk grave legal repercussions were it to reallocate the assets. Courts could subsequently rule that these assets should be returned to Russia. This scenario would be a major nightmare for De Wever and other leaders who are rightly considering their options, and here’s why.
As the summit unfolds, EU leaders must navigate these complex dynamics, balancing their support for Ukraine with internal dissent and legal considerations surrounding Russian assets.