'Pressure only language...': EU advances plan to tap frozen Russian assets to fund Ukraine

European Commission President Ursula von der Leyen on Wednesday said that the European Union is proposing a plan to use frozen Russian assets to help fund Ukraine with 90 billion euros over the next two years, despite opposition from key player Belgium.

Speaking on the initiative, von der Leyen said the rest will be covered by international partners.

She said the EU aims to help Ukrainians “equip them with the means to defend themselves and to lead peace negotiations from a position of strength.”

“Since pressure is the only language the Kremlin responds to, we can dial it up. We have to increase the costs of war for Putin’s aggression, and today’s proposal gives us the means to do this,” The Guardian quoted von der Leyen as saying.

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Von der Leyen said the money would be generated either from EU borrowing or by using Russian central bank assets frozen in the bloc to fund a “reparations loan”, the option pushed by her commission and multiple member states.

“We propose to cover all financial institutions that have accumulated such cash balances, and these institutions would have to move the cash into the instrument of the reparations loan. So in other words, we’re taking the cash balances, we’re providing them to Ukraine as a loan, and Ukraine has to pay back this loan if and when Russia is paying reparations,” she said.

She said the funds will be used “predominantly” to produce and purchase military equipment for Ukraine from Europe and EEA countries, with occasional acquisitions sourced from outside the region.

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EU leaders have already pledged to continue supporting Kyiv next year, with officials emphasising their determination to finalise an agreement on funding sources at a December 18 summit.

However, Belgium, which hosts the international depository Euroclear that holds the majority of frozen Russian assets, has so far rejected the plan, citing concerns that it could face severe legal and financial retaliation from Moscow.

Belgian Foreign Minister Maxime Prevot said the legal texts put forward by von der Leyen “do not address our concerns in a satisfactory manner”.

“We have repeatedly said that we consider the option of the reparations loan the worst of all, as it is risky, it has never been done before,” AFP quoted Prevot as saying.

“This explains why we keep on pleading for an alternative, namely the EU borrowing the amounts needed on the markets.”

Responding to Belgium’s continuing opposition to the plan, von der Leyen said the commission has “listened very carefully” to its concerns, and “have taken almost all of them into account.”

She said there will be “very strong safeguards” in place to make sure the funds are used in the right way, and to protect Belgium from any legal action.

“We will share the burden in a fair way,” The Guardian quoted her as saying.

‘Three-tier defence’

Belgium has insisted on firm guarantees from other EU countries to share liability before supporting a plan to tap frozen Russian assets for Ukraine.

The European Commission said it has established a “three-tier defence” to protect Belgium from legal risks and is looking to access not only assets held in Belgium but also around €25 billion elsewhere in the EU.

The proposal, initially floated as a €140-billion loan, appears to have been scaled back.

EU economy chief Valdis Dombrovskis said that €210 billion in Russian assets could potentially be used, with additional funds drawn only if needed.

Under the plan, Ukraine would repay the loan only if and when Russia compensates for the damage caused.

Despite Belgium’s objections, the initiative could proceed through a weighted majority vote, according to von der Leyen.

Most other EU states support the plan and are confident a solution can be reached.

“We support this and, of course, take Belgium’s concerns seriously,” AFP quoted German Foreign Minister Johann Wadephul as saying.

“They are justified, but the issue is solvable. Solvable if we stand together and are willing to take responsibility,” Wadephul added.

With inputs from agencies