European leaders are set to discuss plans to utilize frozen Russian assets for Ukrainian support at a Brussels meeting on Thursday. The proposed “reparations loan,” valued at approximately €140 billion (£121 billion), would involve releasing frozen Russian state assets held by Euroclear, a Belgian financial institution. This initiative has faced delays due to legal complexities and concerns about potential impacts on global financial stability.
Belgium has expressed hesitance regarding the proposal, citing fears of legal repercussions should Russia challenge Euroclear’s decisions. Russia has strongly condemned the idea of using its funds, with officials labeling it as theft that could destabilize Western financial systems.
As the war in Ukraine continues, the urgency to find ways to support Kyiv has increased, especially as U.S. assistance appears to be waning. To date, EU member states have provided about €177.5 billion (£154 billion) in financial aid. With estimates by the UN and World Bank placing Ukraine’s reconstruction needs at over $486 billion (£365 billion; €420 billion), the stakes are high. The EU had previously frozen around €210 billion (£182 billion) of Russian investments since the full-scale invasion started in February 2022.
International law complicates the situation, as sovereign assets cannot be outright confiscated. A potential workaround would have the EU “borrow” from the frozen assets and replace them with an IOU, with all member states backing the debt. Concerns remain, however, about the financial burden transferring to European taxpayers if Ukraine does not prevail in the conflict or secure damages from Russia.
Support for the loan proposal exists among certain EU nations, including Poland and the Scandinavian states, while countries like Hungary and Slovakia are more cautious. There is also a debate about how Ukraine would utilize the funds, with differing opinions on whether the financing should primarily support military needs or budgetary support. Ukraine, for its part, emphasizes the necessity of having discretion over how to allocate the resources, including reconstruction efforts and victim compensation.
Source: https://www.bbc.com/news/articles/cwykd4l3dy1o?at_medium=RSS&at_campaign=rss