Russian assets worth 210 billion euros are stashed in Belgium. Some EU countries want to give the money to Ukraine, others warn. Today the heads of government of Germany and France are meeting with British Prime Minister Starmer. The clock is ticking.
Ukraine President Volodymyr Zelenskyj with Germany’s Chancellor Friedrich MerzAPA-Images / AFP / JOHN MACDOUGALL
London is the setting for this week’s first major meeting in the endless series of summits accompanying the war in Ukraine. Volodymyr Zelensky will fly in on December 8 to meet Friedrich Merz of Germany, Emmanuel Macron of France and Sir Keir Starmer of Britain.
The leaders of the so-called E3 have recently become the main axis of European decision-making. But the most pressing decisions this week regarding Ukraine’s future will be made in Brussels – not in its role as the seat of the European Union institutions, but in its role as the capital of Belgium.
On December 3, the European Commission put forward a long-awaited proposal to use around 210 billion euros of frozen Russian assets in Europe as collateral for a loan to Ukraine. This loan, initially worth 90 billion euros, could ultimately be significantly larger and enable Ukraine to finance its government and its war effort for at least the next two years.
Without further aid, Ukraine is forecast to run out of money as early as March or April. Belgium, where the bulk of the assets are located, has condemned the proposal from the start and its opposition has intensified in recent weeks.
Belgian Prime Minister Bart De Wever warns against hijacking Russian assets
Reuters
Whether Ukraine receives the loan depends largely on whether the large EU states can persuade the Belgians to reach an agreement with the Commission – a conflict that is increasingly developing into a bitter showdown between the Brussels states.
It is unclear what could change Belgian Prime Minister Bart De Wever’s mind. His biggest concern is that his small country will be liable for the 185 billion euros in frozen Russian assets currently held by Euroclear, a Belgian financial clearinghouse. Russia could try to get the money back after sanctions are lifted.
The EU argues its plan gets around this problem: banks holding Russian assets would have to loan an equivalent amount (interest-free) to the EU, which would then pass it on to Ukraine and be responsible for repaying the banks. The entire EU would therefore bear the risk.
The EU’s clever idea is that in return for the lifting of sanctions, Russia will ultimately have to hand over its assets as reparations to Ukraine after the war. However, De Wever fears that an EU member state (possibly Russia-friendly Hungary) could veto the continuation of sanctions without Russian reparations payments.
British Prime Minister Keir Starmer is hosting the summit
Picturedesk
This would give Russia the opportunity to demand the return of its assets. However, the plan would make it impossible for any single country to lift sanctions. He does so by citing a different basis for its continuation – an EU emergency clause that has never before been used in such complicated circumstances. And which only requires a qualified majority of the member states.
But De Wever also fears that Russia could attack Belgium in other ways. Some experts consider the plan’s legal logic to be questionable. It is unclear whether the takeover of the Ukraine loan itself would constitute an economic emergency for the EU: it is equivalent to about 1% of the bloc’s GDP.
In any case, the plan has not yet convinced De Wever. He argues that other financing mechanisms are available to Ukraine, including those backed by the EU balance sheet.
The prime minister belongs to the right-wing New Flemish Alliance party, which nominally supports the secession of Flanders. His rejection of the Commission’s proposal to freeze assets is widely supported in Belgium. When De Wever spoke on the issue in Parliament on December 4, no opposition party contradicted him.
European diplomats fear that De Wever has gotten himself into such a deep mess that it will be difficult to find a way out. German Chancellor Friedrich Merz, who appears to be most sympathetic to the reparations credit plan, traveled to Brussels on December 5 to have dinner with Belgian and European Commission President Ursula von der Leyen.
Russia’s money to Ukraine? President Vladimir Putin would see this as a provocation
Reuters
But an agreement still seems a long way off. The US is actively lobbying against it, arguing that the return of the assets should serve as an incentive to persuade Russia to sign a peace agreement. If Europe cannot solve the problem soon, Ukraine will face an acute financial crisis.
The agenda for the meeting in London has not been publicly announced but is expected to focus less on the issue of frozen assets and more on recent developments in American and Russian diplomacy.
A Ukrainian official described the meeting as a “support club” for Ukrainian and European leaders who have been repeatedly surprised by American initiatives in the past two months. Vladimir Putin last week rejected the latest US-Ukrainian peace proposal presented to him during a visit to Moscow by US special envoy Steve Witkoff.
European officials are unsure whether to find it reassuring that Russia now bears blame for the stalled peace negotiations or worry about what the Americans might propose next.
US President Donald Trump would rather use the Russia billions as a bargaining chip in peace negotiations
Reuters
The proposal to use frozen Russian assets to secure a major EU loan to Ukraine in the coming years has become a crucial test of Europe’s resolve. Until then, governments must continue to provide millions of euros from their own budgets.
Last week alone, Germany paid 100 million euros to repair Ukraine’s energy infrastructure and the Netherlands paid 250 million euros for arms purchases. Northern European governments, which disproportionately provide this aid, are increasingly upset that the burden is not being shared fairly across the EU.
Based on its current legal argument, the EU could push through the asset freeze plan without Belgian consent, but risking deep internal divisions. The proposal must be approved at the summit scheduled for December 18.
If it fails, some governments are considering issuing common EU debt to provide a bridge loan to Ukraine. Until then, European leaders will be frantically searching for ways to persuade De Wever to give in.
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