EU intensifies talks with Belgium on "reparations loan" for Ukraine - Politico
The European Commission is stepping up negotiations with the Belgian government to secure an important reparations loan of €140 billion for Ukraine.
This is mentioned in an article by Politico, according to Censor.NET.
The publication notes that time is running out while Belgian Prime Minister Bart De Wever focuses on the budget crisis in his country, and the European Parliament will likely also have a say on the loan, which will slow down its approval.
The next round of negotiations on a loan secured by frozen assets of the Russian Federation will take place on November 7.
Senior officials from the European Commission's economic and budget departments will try to reassure the Belgian leadership that any financial and legal risks associated with the loan will be eliminated.
Politico writes that Belgian Prime Minister De Wever is standing in the way of a planned EU mega-loan that could give Ukraine a three-year "financial respite." Ukraine is currently facing a budget deficit.
The failure to agree on a loan will force EU leaders to turn to their own budgets to support Ukraine.
"The Commission's task is to dispel De Wever's fears that Belgium will be obliged to repay Moscow's debt if the war ends, or if the Kremlin's lawyers successfully sue his government for using frozen assets held by the Brussels-based financial depository Euroclear," the article says.
One of the officials told the publication that negotiations at all levels, including the highest, will take place in the coming days.
The negotiations are taking place at a time when De Wever is facing political instability in the country. His government parties are engaged in tense negotiations, trying to agree on the country's budget and fulfill the coalition's promise to cut spending by €10 billion.
What will happen next if Belgium agrees?
Once Belgium's concerns have been addressed, the European Commission will formally propose legislation on the reparation loan in the coming weeks.
Other EU officials told the publication that the European Parliament is also likely to be involved in drafting the legislation. This could delay the process and jeopardize the European Commission's hopes of receiving €140 billion by April, when Ukraine may run out of money.
"The pressure is intensified by the fact that further support for Ukraine from the International Monetary Fund depends on the EU loan," the authors note.
"The longer we delay, the more difficult it will be. This may raise questions about possible temporary solutions and so on. Therefore, the sooner, the better," said European Commissioner for Economic Affairs Valdis Dombrovskis.
What does Belgium want?
Belgium wants EU governments to provide national guarantees worth more than €170 billion for loans that can be paid out at any time. De Wever also wants assurances that the use of Russian assets will have a legal basis.
Dombrovskis noted that European Commission lawyers had carefully assessed all legal risks and considered them to be limited.
"In any case, the guarantees that will be provided to Belgium will cover the potential financial risks" it may face if Russia files a lawsuit, he added.
The aim is for the bloc to provide national guarantees for the loan for at least the next two years, which could be taken over by an EU guarantee in 2028 when the Union's next seven-year budget begins.
A more difficult task is to eliminate the threat of a veto on EU sanctions by countries friendly to the Kremlin, such as Hungary and Slovakia.
The European Commission is considering a legal loophole that would allow Russian assets to remain "frozen" until Russia ends the war and pays reparations to Ukraine. Otherwise, the EU must unanimously "reaffirm" its sanctions against Russia every six months. Unfreezing Russian assets will force Euroclear to transfer all sanctioned funds back to the Kremlin.
Russian assets to help Ukraine
- Earlier, European Commission President Ursula von der Leyen proposed using frozen Russian assets as collateral for providing Ukraine with "reparation loans". Formally, Russian assets subject to sanctions will not be confiscated, but Ukraine will repay such loans only after Russia pays reparations.
- According to various estimates, the European Union's "reparations loan" to Ukraine, secured by Russian assets, could amount to €130-140 billion. Its final size will be determined after the International Monetary Fund assesses Ukraine's financing needs in 2026 and 2027.
- In total, Euroclear currently holds more than €175 billion in cash from frozen Russian assets, which could be used to secure a new loan. But before the EU agrees to grant a reparations loan, it will want to repay the G7 loan to Ukraine of €45 billion ($50 billion) agreed last year, which was to be repaid from the proceeds of frozen Russian assets.
