The European Union fails to pave the way to hand over Russian assets frozen by sanctions to Ukraine. The reluctance of Belgium, where the entity that houses the majority of these funds is located, has prevented support for a loan worth 140 billion euros to be provided to kyiv using those Kremlin sovereign assets. The failure of the decision at the summit this Thursday in Brussels is a great disappointment for Ukraine, which needs a financial lifeline for next spring.
European leaders – all except Hungary, which no longer signs the agreements on Kiev – are instead urging the European Commission to present as soon as possible “financial support options” that respond to the needs of the country invaded by Russia. The idea of using 140 billion of Russian sovereign assets is losing steam, although the main European officials have assured that they are not throwing in the towel.
The formula is not ruled out, but much more legal work is needed to shape a text that satisfies everyone. The community Executive will continue working on a proposal that satisfies everyone.
“It is clear that there are points to be clarified, we have agreed on what, which are the reparations loans, and we have to work on the how, on how we make it possible,” explained the president of the European Commission, Ursula von der Leyen, at the end of the summit. For his part, the president of the European Council, António Costa, has stressed that “no one has vetoed” anything and has highlighted at the same time that both the president of the European Central Bank, Christine Lagarde, and the president of the Eurogroup, Paschal Donohoe, gave a “very clear” message to the Twenty-Seven: “The solution proposed by the Commission respects European and international law.” Yes, the German said, “there are elements that must be addressed, but they can be addressed,” she cited the EU’s senior economic officials. The idea is to return with those answers for the next European summit, in December.
Despite not coming out with the expected agreement, Brussels insists that the political message of commitment to kyiv is profound: “The EU has committed to addressing Ukraine’s pressing financial needs for the next two years, including support for its military and defense efforts. Russia must stop the war immediately,” Costa insisted after closing the Ukraine chapter without mentioning in the conclusions the handover to Kiev. kyiv from those funds.
The European Commission had proposed, for the first time, using frozen Russian assets themselves (not the returns they generate) to help Ukraine. Brussels wants to give most of that money to kyiv in the form of a zero-interest loan that it should only repay when Russia stops the war and pays for the damage caused. Brussels is considering launching a “reparation loan” for Ukraine financed with the cash balances of Euroclear (the financial institution where they are housed) accumulated due to the immobilization of Russian sovereign assets. To do this, it would issue a debt contract tailored to that unit, backed by the Member States.
However, after long discussions, the heads of state and government have not been able to overcome the reluctance of Belgium, the main affected country, and have decided to ask the European Commission to present more “options for financial aid” to kyiv, but without specifying a specific formula. The Community Executive will discuss the issue again at the December Council.
According to sources consulted, it is not – at least for now – a definitive no, but rather a matter of buying a little more time for Brussels to give more details of its plans. The Belgian Prime Minister, Bart De Wever, had made it clear since his arrival at the summit on Thursday morning that he wanted armored guarantees and that these be mutualized, that is, that all countries committed to pitching in if demands arose in the future for the use of these funds.
“If they want to do this, we will have to do it all together. We want guarantees that, if the money has to be returned, each Member State will contribute. The consequences cannot be only for Belgium,” claimed De Wever, who has called for a “complete mutualization of the risk.”
Von der Leyen and the technicians and lawyers of the Community Executive have not managed to overcome Belgium’s fears and reluctance, despite the fact that they have tried to structure a legal language in which they committed to showing “solidarity and shared risk” and addressing “the specificities and legitimate concerns of the affected Member States”, according to the drafts of the summit conclusions. That has not satisfied Belgium, so that direct mention of the “possible gradual use of cash balances associated with frozen Russian assets” has ended up disappearing.
But although Belgium has been the most explicit, other countries admitted that they still had doubts and also want joint responsibility to extend beyond European borders, especially to the G7 countries.
The Euroclear clearing house has about 180 billion euros immobilized, Brussels estimates. The plan proposes using 140 billion of these funds for the reparation loan and leaving the remainder to continue generating returns, which are used to guarantee another previous loan to kyiv.
According to the Commission, the new reparation loan could generate around 45 billion a year between 2026 and 2028. One of the arguments used in the European capital is that there are not many more ways to finance Ukraine’s still huge needs in that period of time, given that the new multiannual EU budget that has only just begun to be negotiated will not come into force until 2028.