Brussels (Brussels Morning Newspaper) – EU member states can choose from three options to fund Ukraine’s needs, with a reparations loan backed by immobilised Russian assets being the most effective, according to EU Commission President Ursula von der Leyen on Thursday.
EU finance ministers are gathering in Brussels this morning to examine the bloc’s economic and financial plans, including the increasingly urgent issue of funding for Ukraine.
In a speech to the European Parliament, von der Leyen openly presented various options for funding Ukraine’s wartime efforts in the years ahead.
What funding options has the EU proposed for Ukraine?
Von der Leyen said that using the frozen Russian assets
“is the most effective way to sustain Ukraine’s defence and its economy. And the clearest way to make Russia understand that time is not on its side.”
She stated in a speech at the European Parliament that the EU could also use “headroom” in its budget to raise capital or reach an agreement with member states to do so individually.
“Option three is to have a reparations loan based on immobilized Russian assets. We give a loan to Ukraine – that Ukraine pays back if Russia pays reparations,”
she said.
“This is the most effective way to sustain Ukraine’s defence and its economy.”
What alternatives exist if the frozen assets plan fails?
The EU could jointly borrow funds for Ukraine if its plan to hand over frozen Russian assets does not make progress. If the assets plan does not come to fruition, von der Leyen suggested issuing common EU debt that will eventually be repaid by national capitals.
The EU Institutions aim to leverage Russian state assets held in Europe to support a €140 billion reparations loan to Ukraine. However, Belgium has opposed this approach, prompting the EU executive to propose alternative options.
What legal risks does Belgium fear from the scheme?
According to reports, Belgium faces significant stakes as it hosts Euroclear, the financial firm managing most of the immobilised assets, and there’s concern that the initiative could introduce legal and financial risks.
Belgium, where Euroclear is based, considers itself liable if a Russian lawsuit against the company succeeds. It requests EU governments to commit to providing the funds to return assets to Moscow within three days if a court rules they must be returned.
EU government officials state that, although it was probably unnecessary, mobilising over 100 billion euros within three days would pose a significant challenge for the EU. Belgium has requested that the Commission establish a strong legal framework for the entire operation to reduce the risk of losing a lawsuit. Additionally, it has urged other EU countries with frozen Russian assets to participate in the scheme to share responsibility.
