EU wants to use frozen Russian funds: Belgium's skeptical line!

EU wants to use frozen Russian funds: Belgium's skeptical line!

Discussions within the European Union about how to deal with frozen Russian assets are becoming increasingly concrete. There are currently several proposals on the table that could significantly affect financial support for Ukraine until 2027. Loud the FAZ A central idea is to use these frozen funds to finance reparations loans, but this is met with resistance - particularly from Belgium.

Belgium is skeptical about a proposal from EU Commission President Ursula von der Leyen that would provide loans to Ukraine worth up to 210 billion euros. This could face uncertain legal and financial risks that cannot be ignored given a possible backlash from Russia. In addition, Belgium demands that the financial risk be shared by other EU states before agreeing to such an arrangement.

Reparation loans and the economic implications

The reparations loan depends on the ongoing freeze of Russian assets, which is to be reviewed every six months. A potential “no” from countries like Hungary under Viktor Orbán could cause problems as the Russian central bank could demand the repatriation of its funds. This raises the question of how much the legal concerns will burden solidarity within the EU.
Economist Benjamin Hilgenstock warns that countries like China and Saudi Arabia have very few alternatives for their foreign reserves. This could lead to states trying to put pressure on European countries by withdrawing from their sovereign bonds.

Ukraine's critical financial situation requires urgent solutions. According to one estimate, Ukraine needs around 135.7 billion euros in the next two years. An agreement on the use of Russian funds could signal that Ukraine can continue to finance its defense spending if Russia agrees to pay reparations after the war.

The encouragement to enforce the sanctions

The US enforcement of sanctions against Russian oil companies, particularly under the Donald Trump administration, has brought about significant change. According to recent reports, Russian oil prices have fallen compared to the global market, putting pressure on Russia. This will be crucial to Russia's ability to cover its war expenses. More than 500 EU tankers suspected of being under sanctions have been identified, but the activity of these vessels has not fallen as sharply as it did under US sanctions.
To further aggravate the situation, the EU may plan to introduce emergency powers to counter opposition, such as from Hungary, ensuring that Russian assets remain frozen indefinitely.

In a further step, Belgium could push for the central management of the frozen Russian funds via the company Euroclear. The value of these funds could be estimated at around 185 billion euros and cooperation between Germany, France, Sweden and Cyprus to make available funds is sought. However, the federal government is reluctant to disclose its information about frozen assets.

With all of these developments, it is clear that reaching an agreement on the use of Russian assets and financial support for Ukraine is not only a challenge within the EU, but could also have far-reaching geopolitical implications. The next two weeks until the meeting of EU heads of state and government in Brussels will be crucial to reach consensus and find a solution that not only averts a humanitarian catastrophe, but can also stabilize the economic situation in Ukraine.