FT: EU leaders stall on €140 billion Ukraine loan using frozen Russian assets

EU leaders were unable to make progress on a proposed €140 billion loan to Ukraine, backed by immobilised Russian assets, during yesterday’s summit, as Belgium maintained its opposition and France and Luxembourg raised concerns over the legal ramifications.

The European Commission had proposed lending the cash equivalent of Russian assets frozen at Euroclear, a Belgian financial institution, to Ukraine. If Russia fails to pay reparations for its war against Ukraine, it would forfeit rights to these assets.

During a brief discussion on the proposal, several EU leaders expressed general support for the concept but emphasised the need for further investigation into legal and fiscal implications, according to three officials briefed on the meeting by the Financial Times. The scale of the technical and legal work required makes it highly unlikely that the Commission will present a formal legal proposal when EU leaders reconvene in Brussels in three weeks.

Belgian Prime Minister Bart De Wever, whose state benefits from tax revenues collected at Euroclear, demanded that the EU “mutualise” the risk of hosting the institution and provide stronger legal protections should Moscow pursue legal action against Belgium. De Wever opposed the proposal during the private discussions but did not speak to reporters before or after the meeting.

“The Commission presented the main elements of its approach. The feedback was constructive, although Belgium raised several legal and technical concerns,” said one EU official. “Still, there is agreement to continue working on this issue.”

European Commission President Ursula von der Leyen told reporters after the summit, “We have to flesh out the full proposal much more. It is absolutely clear that the risk has to be put on all our shoulders.”

Separately, G7 finance ministers agreed last night to “in a coordinated way [use] the full value of the [Russian sovereign assets] immobilised in our jurisdictions to end the war and ensure a just and lasting peace in Ukraine.”

While EU officials describe the Russian assets as “the only game in town,” deploying them to back a loan for Kyiv requires unanimous approval from all 27 member states. Luxembourg’s Prime Minister Luc Frieden warned, “You cannot simply take away something that belongs to another state in this way. What will happen if Russia will not repay?”

By Tamilla Hasanova