European Union leaders meet at the European summit this Thursday with the urgency to finance Ukraine, but are still very divided over the use of Russian assets for a possible 90 billion euro “reparations loan” to keep Kiev afloat.
Amid peace negotiations, Ukrainian President Volodymyr Zelensky will travel to Brussels to meet with European leaders at the expense of the decision they may make on financial aid to Kiev.
The attention of the last summit of the year turns to Belgium, the country where the headquarters of Euroclear is located – the depository that holds the vast majority of the assets in question – and which maintains its opposition to this plan, citing the risks it would run in the event of future claims from Russia.
Before the summit called for an agreement on the use of frozen Russian state assets, contacts with Belgium have multiplied in recent days, and Belgium’s Prime Minister Bart de Wever held a working lunch last Friday with German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen to discuss the legal basis proposed by the European executive.
Various diplomatic sources point out that the present proposal contains many safeguards so that the risks assumed by Belgium are “as low as possible”. “Politically, it is now up to the Belgian government to give in,” sources point out the complex debate that lies ahead at the leadership level.
Faced with the European executive’s proposal that envisages a liquidity mechanism so that both Member States and financial institutions can quickly meet Russia’s demands, the Belgian government insists on examining other “safer and more transparent” options and putting back on the table the possibility of issuing common debt for a loan to Ukraine, a scenario that has been joined in recent days by Italy, Malta, Bulgaria and the Czech Republic.
On the Belgian side, they claim that even residual risk must be communitized between Member States, they insist that the plan must cover all immobilized assets – and not just those of Euroclear – and that the cover for Belgium is unlimited in both amount and duration. The European Commission’s proposal, on the other hand, does not go that far and is limited to the 210 billion euros of frozen assets on the continent, and sources consulted emphasize that it is not possible to offer unlimited guarantees.
In any case, the loan with common EU debt remains on hold due to the rejection of countries like Hungary, which would block the necessary unanimity. The option “is back on the shelf and not being discussed,” explain community sources, who point out that “any option that requires unanimity is not realistic.”
In any case, after the EU applied the exception clause of Article 122 of the EU Treaties to prohibit any transfer of assets blocked in European companies to Russia, bypassing Budapest, it remains open whether the 27 can use this formula again to grant a loan to Kiev with common debts.
“From a legal point of view it is not feasible and politically it would also be extremely complicated,” emphasize sources in a European delegation that is skeptical about this route, while other diplomatic sources warn that the move would violate basic principles of the treaties.
Thus, the President of the European Council, António Costa, will have the complex task of forging the necessary consensus, since it would not be possible to take the decision on the use of the frozen Russian assets without Belgium, although legally only a qualified majority in the Council is required.
However, he has called on EU leaders to make decisions, and while he expects the European summit could be extended, leaders must leave the summit with a decision that provides financial security for Ukraine. “It is difficult to predict what will happen. There is a question mark over this decision,” community sources summarize.
MERCOSUR, IN THE AIR
Although it is not on the official agenda of the leaders, the free trade agreement that Brussels concluded a year ago with the Mercosur countries, which is still pending signature by the 27 states, will also weigh on the atmosphere after France and Italy called this week to postpone the signing of the agreement.
Brazil, the current presidency of Mercosur, has planned everything to celebrate the signing of the agreement on Saturday on the sidelines of a summit of Southern Cone countries in a ceremony attended by Von der Leyen and Costa.
However, just over 48 hours later, the appointment is still pending because for Von der Leyen to sign, she needs a mandate from the Council approved by a qualified majority of member states, and the bill is not yet secured.
Paris, which has opposed the agreement in almost 25 years of negotiations for fear of the impact on its agricultural sector, is not enough on its own to stop the agreement, but it will be able to form a blocking minority if the “no” vote also announced by Poland is joined by the votes of Italy and undecided voters such as Belgium, Ireland or the Netherlands.
In any case, European sources confirm that there are constant contacts at all levels and with various delegations to convince Italy, without whose support the blocking minority cannot exist. The pressure is also increasing because the Mercosur states have made it clear to the Europeans that they will not wait forever and that if the agreement is not signed, they will turn to other regions to conclude trade deals.
The European Parliament’s approval of the protective measures that the European Commission has envisaged this week to strengthen the protection of European producers, with changes that strengthen them, could pave the way, according to various sources in Brussels, who in any case warn that the signature will not be put to vote before the Member States by Friday if there are no guarantees that the result will be positive.
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