Belgium Demands Legal Clarity and Shared Risk for Ukraine Loan from Frozen Russian Assets, EU Decision Postponed

Belgium Halts Immediate EU Action on Frozen Russian Assets

Brussels, Belgium – Belgium has emerged as a key voice of caution within the European Union, demanding a robust legal framework and shared financial responsibility before supporting a proposed EU plan to fund Ukraine using frozen Russian assets. Belgian Prime Minister Bart De Wever articulated these concerns ahead of a recent EU summit, leading to the postponement of a definitive decision on the matter until December.

The EU's proposal involves a 'reparation loan' of approximately €140 billion ($162-165 billion) for Ukraine, secured against the estimated €300 billion in Russian sovereign assets frozen since the 2022 invasion. The majority of these assets, around €200 billion, are held within Europe, with a substantial portion managed by Euroclear, a central securities depository located in Brussels.

De Wever Outlines Three Key Conditions

Prime Minister De Wever emphasized that Belgium would not endorse the plan without three critical conditions being met:

• Clear Legal Basis: De Wever stressed the unprecedented nature of using immobilized sovereign assets, noting that 'Even during the Second World War, immobilised assets were never touched.' He insisted on a solid legal foundation for such a significant step.
• Mutualization of Risk: Belgium fears being disproportionately exposed to potential Russian retaliation, such as the confiscation of Belgian companies' assets in Russia, or facing 'enormous claims' (tens or hundreds of billions of euros) in litigation. De Wever demanded that all EU member states provide joint guarantees and share the financial burden if the funds need to be repaid. 'If not, Russian retaliation might only hit Belgium. That's not very reasonable,' he stated.
• Coordinated Action: De Wever highlighted that Belgium is not the sole holder of frozen Russian assets and called for a united approach from all countries involved, including other EU members and G7 nations. 'If we want to go forward, we have to go forward together. We're not the only country with immobilised Russian assets. We're the only country who offers these assets to Ukraine,' he asserted.

De Wever warned that if these demands are not addressed, he would utilize all political and legal means to block the decision.

The EU's 'Reparation Loan' Proposal and Broader Concerns

The European Commission's plan aims to provide Ukraine with crucial financial support without directly confiscating the principal of the frozen assets. Instead, it proposes using the profits or interest generated from these assets as collateral for the loan. Ukraine would only be required to repay the loan if it receives war reparations from Russia.

Despite support from several EU member states, including Germany and France, the proposal has faced broader scrutiny. The European Central Bank (ECB) has also voiced concerns, warning that such a move could potentially breach international law and destabilize the eurozone's financial system. Ukraine's President Volodymyr Zelenskyy has urged swift action, stating that 'The time to act on Russian assets is now. Anyone who delays this decision is not only limiting our defence but also slowing down your own progress.'

Russia has consistently condemned any plans to use its frozen assets, labeling them as 'theft' and threatening 'painful consequences' and retaliatory measures.

Decision Deferred to December

Following the recent EU summit, leaders opted to defer a final decision on the 'reparation loan' until their next meeting in December. The summit's conclusions were adjusted to reflect Belgium's objections and other legal concerns, with the European Commission now tasked with presenting 'options for financial support' for Ukraine. This delay underscores the complex legal, financial, and geopolitical challenges involved in utilizing frozen Russian assets to aid Ukraine's war effort.