BRUSSELS — Belgium is urging the European Union to establish an additional financial safeguard to counter potential threats from the Kremlin regarding a €210 billion loan intended for Ukraine, which will be backed by Russian assets. This information comes from documents reviewed by POLITICO.
Belgian proposals for a stronger financial framework
The proposed cash reserve is part of a broader set of modifications that the Belgian government aims to implement in the European Commission’s proposal. This initiative involves leveraging €185 billion in frozen Russian state assets held by Euroclear, a financial depository based in Brussels. The remaining €25 billion would be sourced from additional frozen Russian assets, primarily located in private bank accounts across the EU, with a significant concentration in France.
Belgium’s latest demand seeks to enhance Euroclear’s financial resilience against possible reprisals from Russia. The new cash buffer would supplement financial guarantees provided by EU member states for the €210 billion loan, thereby protecting Belgium from the risk of having to repay the total amount should the Kremlin reclaim its assets.
“The safety net will account for increased costs which Euroclear might suffer (e.g. legal costs to defend against retaliation) and compensate for lost revenue.”
Challenges in securing Ukraine’s funding
The Belgian government has proposed that the additional funds be generated from windfall profits accrued by Euroclear through interest on the deposit account at the European Central Bank, where sanctioned Russian funds are currently maintained. Last year, these proceeds reached €4 billion. Currently, most of this income is being allocated to Ukraine to help repay a €45 billion loan from G7 nations, while Euroclear retains a 10 percent reserve to mitigate legal risks.
As EU leaders prepare to gather in Brussels on December 18 to discuss sustainable financing for Ukraine’s defense efforts against Russia, the urgency of Belgium’s demands becomes increasingly clear. Without the effective utilization of Russian assets for this loan, EU governments may face the politically challenging task of directly funding Ukraine through taxpayer money. This prospect is particularly contentious among more frugal member states, which are hesitant to bear the financial burden alone.
Belgium stands out as the primary country hesitant about financing Ukraine through these Russian assets, largely due to concerns about the implications of a potential Russian recovery of those funds. As the situation unfolds, the upcoming discussions will be crucial in determining the future of Ukraine’s financial support and the EU’s collective strategy moving forward.