BRUSSELS — European leaders are expressing concerns over Belgium’s requests for extensive financial protections amid a potential lawsuit from the Kremlin regarding the use of €140 billion in frozen Russian assets currently held in Brussels. This apprehension may jeopardize ongoing negotiations concerning an EU initiative aimed at lending these immobilized assets to Ukraine, especially as a critical summit approaches in December.
The European Commission is nearing the introduction of a legal framework for this loan, as it races against the clock to ensure that Ukraine’s financial resources remain intact ahead of a severe shortfall expected in April. EU leaders are set to provide their input during a meeting scheduled for mid-December.
“We are advancing our work to meet Ukraine’s financial needs,”
Commission President Ursula von der Leyen shared on X on Monday. She added, “We have made good progress, and we plan to table our legal proposals this week.”
Belgium’s demands for guarantees
The proposed reparations loan has sparked significant controversy within the Belgian government, as it would draw upon the cash value of frozen Russian state assets located in Belgium to support Ukraine’s funding. In light of concerns regarding potential Russian retaliation, Belgian Prime Minister Bart De Wever is advocating for EU member states to provide Belgium with financial guarantees that would not only exceed the €140 billion in frozen assets but would also be payable quickly. Furthermore, he seeks guarantees that would extend beyond the duration of the EU’s sanctions against Russia.
While EU nations show a willingness to guarantee a set amount, they are hesitant to agree to what they refer to as a “blank check.” Diplomats from four EU member states have voiced that such an arrangement would leave their national finances vulnerable to unpredictable court rulings, potentially resulting in billions of euros in repayments long after the conflict in Ukraine has concluded.
“If [the guarantees] are infinite and without limits, then what are we getting ourselves into?”
questioned an EU diplomat, who, along with others, requested anonymity for candidness. This topic of the extent of national guarantees is emerging as one of the most challenging issues in the current negotiations.
Potential alternatives and political challenges
According to another EU diplomat, the hesitation in providing a blank check is politically sensitive for numerous member states. Nonetheless, they cautioned that it is improbable that these safety nets would ever be called upon, given the legal robustness of the EU’s proposed scheme.
To facilitate political consensus, the Commission has shared some sections of its legal proposal with EU ambassadors; however, the proposed guarantee amounts remain unspecified.
Should negotiations stall, the most viable alternative may involve issuing additional EU debt to bridge Ukraine’s budgetary gap. This approach is generally unpopular among EU governments, as it requires utilizing taxpayer funds.
During a recent meeting of EU defense ministers, the EU’s foreign policy chief, Kaja Kallas, acknowledged Belgium’s concerns but did not propose a clear resolution. She remarked,
“I don’t diminish the worries that Belgium has, but we can address those, shoulder those and work on a viable solution.”