Belgian Prime Minister Warns EU on Risks of Using Frozen Russian Assets for Ukraine

Belgium Expresses Strong Reservations on EU's Russian Asset Plan

Belgian Prime Minister Alexander De Croo has issued a stern warning to the European Union regarding its proposal to use frozen Russian assets to finance Ukraine. De Croo articulated concerns over substantial financial and legal liabilities that could fall upon Belgium, emphasizing the need for comprehensive risk-sharing among EU member states.

Legal and Financial Liabilities Highlighted

The EU's plan involves leveraging frozen Russian state assets, estimated at around €140 billion ($162 billion), to provide a 'compensation loan' to Ukraine. Belgium finds itself at the heart of this debate as it hosts the vast majority of these immobilized assets, approximately €183 billion to €190 billion, at the Brussels-based central securities depository, Euroclear.

Prime Minister De Croo has underscored several critical risks associated with the plan:

• The potential for Russian retaliation against Belgium.
• The significant risk of legal challenges and lawsuits should issues arise with the EU loans.
• Concerns that the scheme could be perceived as 'expropriatory in nature,' potentially undermining investor confidence in the euro and creating systemic risks for Euroclear and broader EU financial markets.
• A warning that rushing the plan could inadvertently hinder the prospects of a future peace agreement between Ukraine and Russia.

De Croo has reportedly demanded that all EU countries provide full and binding guarantees to share the legal and financial risks, ensuring Belgium is not solely responsible for any potential repayment obligations.

Alternative Funding and Upcoming Decisions

As an alternative, Prime Minister De Croo has suggested that the EU explore using unused borrowing rights within its shared budget to meet Ukraine's financial needs, proposing a sum of €45 billion. This approach, he argues, could be a less risky and potentially more cost-effective solution.

The discussions come as EU leaders prepare for a crucial summit on December 18-19, where decisions on continued funding for Kyiv are expected. The Belgian government's firm stance highlights the complexities and divisions within the bloc regarding the unprecedented use of frozen sovereign assets.