German Chancellor Friedrich Merz is set to arrive in Brussels on Friday to engage in crucial discussions with Belgian Prime Minister Bart De Wever and European Commission President Ursula von der Leyen. The primary aim of this visit is to garner support for a €165 billion reparations loan for Ukraine, a financial move that hinges on utilizing the cash value of frozen Russian state assets located in Belgium.
“Chancellor Friedrich Merz will travel to Belgium tomorrow evening for a dinner meeting to speak privately with Belgian Prime Minister Bart De Wever and European Commission President Ursula von der Leyen,” a German government spokesperson announced.
In a significant shift of plans, Merz cancelled his intended trip to Oslo to prioritize this meeting in the European Union capital. The urgency of the situation is underscored by the looming deadline, as Ukraine’s financial reserves are projected to deplete by April.
Challenges in securing Belgian support
Despite the pressing need for financial support, De Wever remains opposed to the initiative. His hesitance stems from the fact that most of the Russian assets are managed by Euroclear, a financial depository based in Brussels. He fears potential retaliation from Russia against Belgium, both domestically and internationally, and is calling for robust financial guarantees from other EU member states before he can consider endorsing the Commission’s proposal.
EU leaders are scheduled to address this initiative during a meeting in Brussels on December 18. If an agreement is not reached, European governments may be compelled to utilize taxpayer funds to help sustain Ukraine amidst ongoing conflict.
Legal and financial concerns
Convincing De Wever will be no simple task, a fact von der Leyen is acutely aware of following her own discussions with the Belgian leader, which did not result in a breakthrough. De Wever is not only seeking substantial guarantees that can be activated swiftly, but he is also demanding that other financial entities holding Russian state assets across the EU adhere to similar standards as Euroclear.
Moreover, there are substantial legal concerns regarding potential lawsuits from Russian entities. The Belgian government is wary of challenges based on a bilateral investment treaty with the Soviet Union signed in 1989. Russia’s former president, Dmitry Medvedev, has issued multiple threats, stating, “If the crazy EU does steal frozen Russian assets for a ‘reparations loan,’ we may view it as a casus belli with all the relevant implications for Brussels & Co.”
Despite the apprehensions from Belgium, the Commission has consistently downplayed the perceived legal risks. However, it will require De Wever’s backing to advance with the reparations plan. In preparation for the December 18 discussions, diplomats are actively reviewing the Commission’s legal framework to address Belgium’s concerns. Chancellor Merz is also playing his part in these diplomatic efforts.
“I fully understand that the Belgian government in particular, in whose country a large part of the frozen assets are located, cannot rely solely on political commitments,” Merz articulated in an op-ed for the Frankfurter Allgemeine Zeitung following the Commission’s proposal. He emphasized the need for prompt and conclusive discussions to move forward.