EU fights for Belgian support for 140 billion loan to Ukraine

The European Union is entering a crucial phase of negotiations on an unprecedented €140 billion loan to Ukraine, to be financed by the proceeds of frozen Russian assets. The main obstacle so far is Belgium - the country on whose territory lies the financial giant Euroclear, which manages the largest part of Russian state reserves in Europe, Politico pointed out.

The European Commission (EC) is trying to persuade Belgian Prime Minister Bart De Wever to support a plan that would provide Ukraine with three years of financial stability. Kiev is facing a budget deficit of around $60 billion over the next two years and could run out of funds as early as spring without outside help. Further support from the International Monetary Fund also depends on the loan.

The problem is that De Wever is dealing with his own budget crisis at home and does not want to risk Belgium being held legally or financially responsible for any claims by Russia. The Belgian Government is therefore demanding that all Member States provide national guarantees in excess of EUR 170 billion, which could be invoked immediately in the event of a legal dispute. The Prime Minister also insists that the use of the proceeds from Russian assets must be on a firm legal basis.

The frozen Russian assets of more than €200 billion are mainly managed in the Brussels-based Euroclear depository. The EU would like to use the proceeds of the investment, not the capital itself, which the Commission believes would avoid a breach of international law and the immunity of state assets. EC lawyers say the risks of litigation are „limited“, but Belgium remains cautious.

Commissioner for the Economy Valdis Dombrovskis stressed that any delay threatens not only Ukraine's financial stability but also the credibility of the EU as a whole. „The longer we delay, the more difficult it will be to find an interim solution,“ warned at a conference in Sofia this week. He said the EU should provide national guarantees until at least 2028, when a new seven-year budget would take over the role of guarantor.

However, Belgium is in a difficult internal political situation. The De Wever government is trying to cut spending by EUR 10 billion and has repeated problems with the adoption of the budget. The Prime Minister has asked King Philippe for time until Christmas to negotiate a compromise with his coalition partners. In such an atmosphere, support for a risky European project is politically fragile.

If the Belgian concerns can be allayed, the Commission intends to present a formal bill in the coming weeks. The European Parliament is also likely to be involved in the legislative process, which could slow down the whole mechanism even further. Brussels aims to reach an agreement by April 2026, when Ukraine is realistically at risk of running out of cash.

In addition to the Belgian position, the EU also has to deal with a potential veto by pro-Russian governments in Hungary and Slovakia, which may block the regular extension of sanctions against Moscow. Without unanimous agreement, sanctions would automatically be lifted every six months and Euroclear would have to release frozen funds back to Russia. The Commission is therefore considering a legal solution that would allow Russian assets to remain frozen until the Kremlin ends the war and pays reparations to Ukraine.

The European Commission's intention sets a historic precedent - for the first time, the international community would use the proceeds of an aggressor's frozen state assets to fund a victim of war. Success would mean not only financial relief for Kiev, but also a strong political signal that the EU can translate sanctions into concrete aid.

For now, however, the biggest question is whether Belgium can be persuaded to take its share of responsibility. If not, the $140 billion plan risks ending in a political stalemate and Europe will have to look for another, more costly way to help Ukraine survive the next phase of the war.

gnews.cz - GH