Belgium Rejects EU Plan for Frozen Russian Assets to Aid Ukraine
On Wednesday, Belgium officially rejected a European Union proposal aimed at utilizing frozen Russian assets to support Ukraine's economy and military efforts over the next two years. The Belgian government cited significant financial and legal risks associated with the proposed scheme.
Ukraine's Funding Requirements and Asset Overview
Ukraine's estimated budgetary and military needs for 2026 and 2027 total approximately 130 billion euros. The European Union has committed to addressing this funding deficit, having already provided over 170 billion euros since the conflict began in 2022.
A substantial portion of available funds is derived from frozen Russian assets. As of June, approximately 194 billion euros of these assets are held in Belgium. Additional amounts are located outside the EU, including roughly $50 billion in Japan, with lesser sums in the U.S., U.K., and Canada.
EU Proposal and Belgian Concerns
The European Commission had planned to release details on Wednesday regarding its proposal to use frozen Russian assets as collateral for a "reparations loan" to meet Ukraine's financial requirements.
Belgian Foreign Minister Maxime Prévot stated that Belgium views the reparations loan option as the least favorable due to its associated risks and unprecedented nature. He advocated for the EU to secure funds for Ukraine from international markets, describing this approach as "a well-known, a robust and a well-established option with predictable parameters."
Prévot further indicated that the reparations loan scheme involves "consequential economic, financial and legal risks" and that the Commission's current proposals do not alleviate Belgium's concerns. He emphasized that utilizing the funds without addressing Belgium's exposure to risks is "not acceptable."
Belgium expressed concern that Euroclear, the Brussels-based financial clearing house holding the frozen assets, might face legal action from Russia if the funds are utilized, or that such a move could negatively impact Euroclear's reputation and business operations. Prévot communicated that Belgium perceives its concerns are not being adequately acknowledged by its EU partners, adding that Belgium's objective is to prevent "potential disastrous consequences" for a member state asked to show solidarity without receiving reciprocal solidarity.
Scheme Mechanism and Partner Responses
Under the proposed mechanism, EU member states would extend loans to Ukraine totaling approximately 140 billion euros. These funds would be repaid by Kyiv upon Russia compensating for war damages. If Russia does not provide reparations, the assets would remain frozen.
Belgium's EU partners affirmed their understanding of the situation. German Foreign Minister Johann Wadephul informed reporters that Belgium's concerns are considered "serious" and "justified," adding that the issue is "resolvable" through collective responsibility. Dutch Foreign Minister David van Weel emphasized the significance of these funds for supporting the Ukrainian economy, stating that without them, Ukraine would face considerable economic challenges in the coming year. Van Weel also stated, "We understand the Belgian concerns, and we are willing to at least make sure that they are not alone in this." Several EU member states have committed to providing financial guarantees in case of adverse outcomes.
Financial Context and Upcoming Discussions
Belgium currently generates tax revenue from these assets. The interest accrued from these funds contributes to a loan program for Ukraine, organized by the Group of Seven (G7) nations.
The European Central Bank has expressed apprehension that the proposed EU reparations loan could impact confidence in the euro currency on international markets. EU leaders are scheduled to discuss the scheme and Ukraine's economic and military requirements at a summit in Brussels on December 18.