That one revolutionary step from Europe, desired by many, did not materialize this week. But when that realization dawned on Thursday night after hours of consultation in the Brussels meeting room full of government leaders, another revolutionary step took its place.
It is a meeting that will reverberate for a long time. By reaching an agreement on a new EU loan of 90 billion euros, European leaders will not only help Ukraine largely out of financial trouble over the next two years, they will also strengthen their mutual cooperation. Borrowing money jointly is becoming less and less taboo.
The other revolution was postponed — and probably canceled. For the time being, the EU will not touch the frozen Russian money on European soil to help Ukraine, no matter how poetic that may seem. German Chancellor Friedrich Merz, Commission President Ursula von der Leyen and Prime Minister Dick Schoof would have liked to see it differently.
Merz had called using the funds in the run-up to the summit the “only option”. Von der Leyen had said in the European Parliament that she could not imagine a scenario in which European taxpayers would “solely pay” to enable Ukraine to keep its army afloat and meet its budget.
The plan slipped from their fingers in the room. The resistance of Belgium, which houses most of the assets and feared the consequences if the money were used, turned out to be too great. A compromise with enough certainties had been sought for months. But for every guarantee that Belgium was promised at the eleventh hour, doubts grew among the rest. The fact that major countries such as Italy and France hesitated sealed the fate of the plan.
Unlimited
The signs were already there. In the run-up to the EU summit, Prime Minister Bart De Wever had achieved something that few Belgian politicians could imitate: he had united the country behind him. The risks for Belgium were too great, it was felt. Lawyers and economists considered the consequences unpredictable. That was also a boost.
De Wever fought for a national cause with the support of the nation, and got his way. The feared Russian claims against Belgium will therefore not materialize, as will the disruption of the financial system that opponents had warned about. Euroclear, which manages the lion’s share of the frozen Russian assets in Belgium, plays a crucial role in financial transactions.
This autumn, De Wever did not tire of explaining the risks of the Russian route. He demanded that the EU guarantee all conceivable risks that Belgium would run, no matter how unlikely they were according to experts from the European Commission. He actually wanted nothing less than a blank check. Whatever Russia came up with to punish Belgium, the EU would have to pay the costs.
The other leaders wanted to go very far to accommodate De Wever. But they could not possibly agree to “unlimited” guarantees, as the compromise text before them proposed. They thought they would never be able to get that past their own parliament, even if they were allowed to do so. And furthermore: what were the consequences for their own banks, for their companies, for the euro, if this continued?
Belgian Prime Minister Bart De Wever actually wanted nothing less than a blank check
Ukrainian President Volodymyr Zelensky is also among the winners. Kyiv’s financial needs for the next two years have been largely alleviated. What Ukraine still lacks will have to be made up for by others, for example by the United Kingdom.
Zelensky will therefore receive the much-needed money to keep the government running and to buy weapons. But he did not get the satisfaction that enemy Russia has to bleed financially. It would have been sweet revenge if Russia had been bombarded with weapons it had paid for. “That is moral, just and legal,” said Zelensky, who had traveled to Brussels himself to attend the summit.
There was also a festive atmosphere in Moscow. The Russian money stays where it is. But more importantly, Russia has achieved a political victory. Moscow had launched an extensive campaign to intimidate Belgian politicians. The risk of damage claims was widely discussed in the public debate.
Russian President Vladimir Putin weighed in again at his annual press conference on Friday. If the EU had used Russian assets as collateral for a loan, it would have been no less than robbery, he said, before presenting himself as a moral arbiter. “If someone does it secretly, you call it theft. But if it happens openly, it is simply robbery.”
On the other hand, it was a painful night for Merz. When the Chancellor appeared on the international stage at the beginning of this year, the leaders of the other two major European countries, Emmanuel Macron and Keir Starmer, were already paralyzed by political difficulties at home. In recent months, Merz has increasingly profiled himself as a European leader, for example in the peace talks for Ukraine.
In Merz’s eyes, the assets issue was a test for a new, autonomous Europe in the Trump era. It is little consolation for Merz that the Russian assets remain frozen and the debate about their use can always be reopened.
Step forward
And the EU itself? Winner or loser? De Wever’s resistance was tenacious and at times drove proponents of the Russian route to despair. A few even suggested using Russian assets without Belgian permission.
It didn’t get that far. This also makes the EU a winner in a sense: the large member states have not gone so far as to push a small member state aside. The EU remained true to its principles. It helped that many countries understood Belgian concerns. Moreover, De Wever repeatedly emphasized that he wholeheartedly supported the goal – money for Ukraine.
Moreover: support for Ukraine is also support for Europe, diplomats emphasize. With the Russian assets, the EU ventured into uncharted territory with risks that were difficult to quantify. The route now chosen is more familiar. The European Commission will borrow money at a favorable interest rate on the capital market and then lend the money to Ukraine interest-free. The reserves in the EU budget are the collateral, and interest costs are also included in the budget.
Yet this route is also revolutionary in its own way. The Commission has not borrowed money on this scale so often, and the money lent almost always had to be repaid – only the gigantic corona recovery fund consisted partly of donations. Nominally, Ukraine must repay this loan, with EU countries saying they want to do so with the help of Russian reparations or the funds.
In practice, this loan could well turn out to be a gift for Ukraine, although no one says that out loud
But officials and diplomats acknowledge that this will be a tricky job. After all, it was not possible to obtain the money on Thursday night. This will not become easier once the war is over, they argue, and Russia and the United States are also after the assets. Moreover, the question is whether the EU will force Ukraine to pay back, even if that Russian money arrives, if the country is also struggling with the costs of reconstruction or wants to settle damage claims by then.
In practice, this loan could well turn out to be a gift for Ukraine, although no one says that out loud. It is not without reason that several economists concluded to the Reuters news agency on Friday that the taboo on joint loans in the EU is gradually melting away.
This is a sensitive issue for the Netherlands, always a fierce opponent of ‘Eurobonds’. On the other hand: until now, the Netherlands has contributed much more to Ukraine on a voluntary basis than many other EU countries, especially in Southern Europe. If this construction helps to support Ukraine for the long term, the burden will at least be shared more equally. This is how more diplomats from the countries that have so far supported Ukraine most generously argued after the meeting.
The fact that this requires an EU loan, an instrument that is generally popular in Southern Europe and leads to disapproving looks in the Netherlands, shows that nothing is impossible in European marathon meetings.
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