On Thursday, EU states lifted a key hurdle to using Russian assets for a mammoth loan to Ukraine by agreeing on a way to keep the funds frozen as long as required without need for renewal every six months, the bloc’s Danish presidency said.
The European Commission is pushing to tap some €200 billion (US $232 billion) of Russian central bank assets immobilised in the bloc after the 2022 invasion of Ukraine, to provide Kyiv with much-needed funding beyond the end of this year.
The loan plan faces strong resistance from Belgium, where the bulk of funds are held, but work is nevertheless moving ahead on the scheme — with the EU desperate to strike a deal at a summit next week.
The sanctions freezing the Russian funds currently require unanimous renewal twice a year, leaving them vulnerable to a veto from Hungary, the EU country closest to Russia.
Under the proposal agreed Thursday by a “large majority” of ambassadors from the EU’s 27 nations, the freeze would remain in place “until the end of Russian aggression”, an EU diplomat said.
The proposal — which still needs formal approval by finance ministers meeting on Friday — is based on Article 122 of the EU Treaty, which allows for exceptional measures in cases of emergencies facing the bloc.
Hungary’s EU mission swiftly hit out at the move, saying it had opposed the “unprecedented decision to extend sanctions on an incorrect legal basis in order to circumvent unanimous decision-making”.
Belgium not convinced
The emergency clause was previously used during the Covid-19 pandemic to enable vaccine purchases.
EU leaders have already pledged to keep Kyiv afloat next year, and officials are determined to reach an agreement on where the money should come from at their December 18-19 summit.
But they still have hard work to persuade Belgium, which as the home of Euroclear — the organization holding most of the funds — fears legal or financial retribution from Moscow.
Most other EU states back the Reparation Loan plan and insist that a solution can be reached.
Under the complex scheme proposed by the EU, Euroclear would loan the money to the EU, which in turn loans it to Kyiv.
The funds would only be paid back by Ukraine if and when Russia compensates Kyiv for the destruction it has wrought.
The EU’s executive has insisted it would put a “three-tier defence” in place that would mean there is “no scenario” under which Euroclear would not be able to get the money to repay Russia if needed.
