Commission President Ursula von der Leyen wants to “increase the costs of war for Russia.” For example, Brussels hopes to invite Moscow to the negotiating table in the peace initiative for Ukraine. Because, Von der Leyen said on Wednesday, a day after Russian President Vladimir Putin stated that the EU has no agenda for peace: “Pressure is the only language the Kremlin responds to.”
If it were up to her and the College of European Commissioners, Brussels will soon allocate 90 billion euros to support Kyiv over the next two years, financially but especially militarily. After weeks of intensive discussions, the European Commission presented its ideas on the way forward on Wednesday.
This can be done through a joint European loan, which involves borrowing on the capital market with the EU budget as collateral. The capital raised will then be provided to Kyiv as a loan. But a ‘restoration’ could also be initiated, in which Russian assets frozen in Europe are used in Ukraine. The funds would have to be repaid by Kyiv when Moscow – in a peace scenario, and as the loser of the war – starts paying reparations.
It is a route that the Kremlin previously interpreted as an “act of war”, after the Commission launched a plan in October to use 140 billion euros in Russian assets as collateral for a loan to Ukraine. The plan met fierce resistance from Belgium, where the lion’s share of ‘immobilized assets’ in Europe are parked at the Brussels securities depository Euroclear.
Systematic undermining
Prime Minister Bart De Wever fears sharp repercussions and financial claims from Russia and points to the systematic undermining of confidence in the financial system in Europe. At the end of October, he blocked the controversial EU plan during a European summit in Brussels. Discussions with the Von der Leyen Commission followed, including about building in legal guarantees and shared financial risk for the member states. In a letter he sent to the Commission last week, De Wever remains firmly opposed to the use of Russian assets.
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Belgium is under great political pressure over Russian Euroclear assets
On Tuesday it also became clear that the ECB refuses to act as a loan bank to Ukraine, with Russian government bonds as collateral, the Financial Times.
Belgium advocates a joint EU loan, “a proven option with predictable parameters.” But many member states – including Germany and the Netherlands – are not very keen on this. Irritation is growing in the corridors of Brussels about Belgium’s position. German Chancellor Friedrich Merz, averse to anything that smells of Eurobonds (joint bonds), joined a op-ed in the German newspaper Frankfurter Allgemeine openly supports the use of the funds.
According to Merz, it is not only up to Europe to strengthen Ukraine, it is also a signal to Moscow “of European independence”, according to the Chancellor. “We Europeans determine and shape what happens on our continent.”
European Commissioner Valdis Dombrovskis (Economics) summarizes the shared European sentiment when he states that the Russian assets represent “the scale of aid we need, without putting additional pressure on the European and national budgets.”
Qualified majority
If necessary, the European Commission will sideline Belgium this time. While a joint EU loan requires unanimity of the member states – complex in advance with Russia-loving member states Hungary and Slovakia – the recovery loan option, with the use of Russian assets, only requires a ‘qualified majority’. This amounts to the support of at least fifteen Member States, which together represent at least 65 percent of the EU population.
One way or another, the aggressor will have to pay Russia for the damage caused
“We have the frustrating feeling of not being heard,” said Maxime Prévot, the Belgian Minister of Foreign Affairs, at an additional NATO summit early this week. According to the minister, Belgium’s concerns are “downplayed” in the latest Commission proposal. MEP Thijs Reuten (GroenLinks-PvdA), like Von der Leyen, opts for a hard line towards Moscow and advocates a recovery loan. “Putin must feel that his war has a price,” said Reuten. “One way or another, the aggressor Russia will have to pay for the damage caused.”
According to the IMF, Ukraine will need more than 135 billion euros in financial aid in 2026 and 2027. In the latest proposal, Brussels wants to provide two-thirds of this, the rest (45 billion euros) must come from other international allies such as the US, the UK and Canada.
During the next European summit on December 18 and 19, Europe must provide an answer and the discussion about whether or not to use Russian assets must be settled.
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‘Russia appears unwilling to make concessions’ during discussions on a slimmed-down points plan
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