BRUSSELS (AP) 鈥� European Union envoys worked on Tuesday to narrow gaps on a plan to use billions of dollars in frozen Russian assets as collateral for a to cover Ukraine’s economic and military needs over the next two years, ahead of a crunch summit of EU leaders later this week.
Almost four years into Russia鈥檚 on Ukraine, have Kyiv鈥檚 needs, which puts at 135 billion euros ($157 billion). Ukraine is desperate to secure the money by early 2026.
鈥淲e do not have the luxury of time,鈥� Sweden’s EU Affairs Minister Jessica Rosencrantz told reporters in Brussels. 鈥淚t is really time to move forward with a decision, and Sweden is willing to share the risk because the cost and risk of doing nothing is greater.鈥�
Such a move has never been made before, and it comes with risks. The European Central Bank has warned that if Europeans appear willing to grab other countries鈥� money, it could undermine confidence in the euro currency. Some member nations are also concerned about inviting retaliation from Russia.
Belgium, where most of the assets are held, is the main opponent of the plan. It fears that Russia will strike back, either through the courts or in .
European Council President Ant贸nio Costa, who will chair Thursday’s summit, has insisted that the leaders should not leave EU headquarters in Brussels until they have reached a decision, even if it takes days.
A deep freeze, and two options
EU leaders froze the money, most of it in Russian Central Bank assets, over the war that President Vladimir Putin launched in February 2022. Moscow has described the plan as 鈥渢heft.鈥�
Then last Friday, the EU placed an on the assets 鈥� estimated to total around 210 billion euros ($247 billion) 鈥� to ensure that Hungary and Slovakia, both with , can鈥檛 prevent the billions of euros from being used to support Ukraine.
It also ensures that the assets can’t be used by the United States or Russia in any Ukraine peace without European approval.
Two plans for using the money have emerged. The first would be a 鈥渞eparations loan鈥� that would use the Russian assets until Moscow agrees to pay for the damage inflicted on Ukraine. Few think Putin will ever agree to pay reparations.
Plan B would be for the EU to borrow the money on financial markets, much as the bloc did to fund a massive European economies after the coronavirus pandemic. But many of Europe鈥檚 major economies are cash-strapped and mired in debt.
The assets make up a substantial pot of potentially ready-to-use cash. The vast majority 鈥� around 193 billion euros ($227 billion) at the end of September 鈥� are held in the Belgian financial clearinghouse known as Euroclear.
Plan A has distinct political advantages. Should the EU choose to use the assets, only 鈥渁 qualified majority鈥� of countries 鈥� around a two-thirds majority 鈥� would be required for a green light. Borrowing on financial markets would have to be endorsed by all, meaning that even a single no vote would sink the idea.
Over the last year, Hungary has at almost every turn. The government in is starting to dig in its heels as well. Avoiding a veto is in the interest of the vast majority of member countries.
Details of the reparations loan
European Commission President Ursula von der Leyen has said the EU would cover two-thirds of Ukraine鈥檚 needs for 2026 and 2027, for a total loan of 90 billion euros ($105 billion). International partners would fill the gap.
Due to EU sanctions on Russia鈥檚 assets, cash balances have accumulated at Euroclear. Under the new plan, some of the cash would be transferred to an EU debt instrument. Ukraine would owe the EU the money but would repay only after the bloc鈥檚 sanctions are lifted and after Russia agrees to pay war reparations.
The commission insists that there is no 鈥渢heft,鈥� as Russia has claimed, because the right of the Russian Central Bank to make a claim on its money and Euroclear鈥檚 duty to repay will remain intact.
Once Putin paid war reparations, Ukraine would repay the EU, the EU would repay Euroclear, and Euroclear would repay the Russian Central Bank, which in recent days in an effort to recover its money, ramping up pressure ahead of the summit.
Opposition in Belgium
Importantly for Belgium, the plan contains safeguards to ensure that the risks would be shared by its partners. Other EU countries would offer to guarantee the loan if something went wrong. Germany has already signaled that it would do so, as Sweden did on Tuesday.
But the Belgian government has not been assuaged. Even before the commission鈥檚 reparations loan plan was made public, the government warned of 鈥渃onsequential economic, financial and legal risks,鈥� and said it felt that EU partners were not listening to its concerns.
Euroclear has not ruled out legal action of its own, should the EU oblige it to transfer the Russian assets.
But Ukrainian President Volodymyr Zelenskyy agrees that a reparations loan would be 鈥渁 game-changer. Why? Because it is a security guarantee for Ukraine 鈥� a financial security guarantee.鈥� Ukraine, he said, would be free to use the money on its economy, infrastructure or armed forces, depending on how the war goes.
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Susie Blann in Kyiv contributed to this report.
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