EU leaders have gathered in Brussels to secure funding for Ukraine’s defence over the next two years, but Belgium’s opposition to using frozen Russian assets held in the country has complicated efforts to strike a deal.
The European Union (EU) leaders gathered in Brussels on Thursday to decide how to finance Ukraine’s defence and reconstruction for the next two years, but Belgium’s resistance to using frozen Russian assets stored in its territory has complicated their efforts.
EU chief Ursula von der Leyen has
proposed to raise €90 billion from frozen Russian assets to fund a loan for Ukraine. Supporters have hailed it as a groundbreaking plan but Belgian Prime Minister Bart De Wever has argued it would leave his country dangerously exposed.
The concern stems from Euroclear, the Brussels-based securities depository that holds about 70 per cent of frozen Russian assets. Belgium fears that if Russia sues and wins in an international court, the country could be liable for not just the principal but also hefty penalties.
Russia has already filed a lawsuit in a Moscow court. While any ruling there would not be enforceable outside Russia, the case sets a precedent for further legal challenges in Belgian or international courts.
Experts, however, say a Russian victory would be extremely difficult and any verdict nearly impossible to enforce. They stress that Belgium’s risks are mostly political and reputational, not financial. Still, De Wever insists he will not back any plan that threatens “the financial security of Europe and Belgium.”
De Wever warned it would be a “shame” if the loan were approved despite Belgium’s objections but signaled openness to
“compromises” that spread risk across the EU.
Belgium’s three conditions for a deal
De Wever has laid down three conditions for any EU funding deal for Ukraine. The central idea is to avoid the concentration of risk and liabilities with Belgium alone.
Firstly, De Wever has called for the full sharing of risk among all EU members.
In case of any lawsuits or adversarial rulings, Belgium has demanded open-ended guarantees to protect itself. While Germany has pledged €50 billion in guarantees, Belgium wants the remaining gap to be filled as well — Belgium’s Euroclear holds around €180 billions of frozen Russian assets.
The EU has pledged guarantees to the tune of €210 billion,
the total value of frozen Russian assets in Europe, but neither EU nor EU member-states individually have provided unlimited guarantees to Belgium. That’s an issue for De Wever as, theoretically, punitive rulings could ask Belgium to pay an amount that could far exceed that value after factoring in any fines or penalties.
Secondly, De Wever has demanded that Euroclear should be able to honour its legal claim with Russia with absolute immediacy. This means that, as per the international law, as and when Russia asks for its funds whenever sanctions and freeze are lifted, Euroclear should be in a position to return the money.
This demand could be addressed easily as the EU is willing to lend money to member-states that can’t meet their pledged guarantees, according to Euronews.
But, again, Belgium could demand that this should be a grant and not a loan that the country should be expected to repay to the EU.
Thirdly, De Wever has demanded that every EU member-state that holds Russian sovereign assets should participate in the reparations loan, as per Euronews.
These nations are Germany, Sweden, Cyprus, and France. Additionally, De Wever has demanded that other G7 partners —the United Kingdom, Canada, and Japan— should also float similar loans to Ukraine, as per the report.
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