Brussels, 13 years old (European Press)
European Commission President Ursula von der Leyen on Thursday defended a reparations loan to support Ukraine using the liquidity of Russian assets frozen in Europe as the “most effective way” to support Kiev, warning that alternatives include issuing bonds with regional budgets or through bilateral loans with Ukraine.
“This is the most effective way to preserve Ukraine’s defense and economy, and the clearest way to make Russia understand that time is not on its side,” the Community President said in a debate in the European Parliament about a proposal to use Russian assets frozen in the EU to finance €140 billion worth of loans to keep Ukraine in the fight.
Mr. von der Leyen elaborated that this mechanism is based on cash balances of fixed assets. He explained the option the European Executive is working on to persuade Belgium, the headquarters of the Euroclear Fund where most of these assets are located, that “we will grant Ukraine the loan. Russia will pay reparations and Ukraine will repay it.”
The Belgian government claims this is a “confiscation” that will expose it to possible Russian claims, and is seeking legal guarantees that the remaining partners will support it if Russia seeks responsibility in the future.
The last European summit in October therefore tasked European executive powers with developing different options for providing long-term support to Kyiv, but reparation financing has always been the preferred route for Brussels, and despite the legal and practical questions this scenario raises, support within the 27 countries is growing.
The city of Brussels is currently working on “options” to finance Kiev, but various European sources consulted in recent days stress that the focus is on leveraging assets to fund reparations loans, and that other possibilities are only “theoretical” solutions.
As an alternative, German conservatives elaborated that two other options include issuing government bonds. He pointed out that one way to do this is to use budgetary slack to raise funds in the capital markets, while another option is for member states to conclude bilateral agreements and raise the necessary funds themselves.
In the final part of the debate, Trade Commissioner Maros Sefković asserted that the European Executive is working “diligently” to advance the Ukraine financing issue and recognizes the issue as “extremely complex and difficult.”
“However, we are using all legal expertise and all diplomatic resources at our disposal to find a solution to this problem,” he said, stressing that Brussels “will spare no effort” to find a solution to continue financial support to Kiev.
The option of using Russian assets frozen in Europe to finance Ukraine is also gaining consensus among European Chamber groups. For the European People’s Party, Dutch lawmaker Jeroen Lenners called on EU member states to find an early solution to the issue of using frozen Russian assets to rebuild Ukraine.
Meanwhile, Bas Eichhout, the Green Party’s parliamentary spokesperson, appreciated the progress made by the European Executive to overcome Belgium’s reservations and opted to take steps to ensure that member states reach the necessary agreement at the December summit.
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