The aim is to approve the permanent immobilization of assets of the Central Bank of Russia, even before the decisive summit on December 18. A meeting at which European leaders pledged to approve a huge financial aid package to keep Ukraine afloat over the next two years and enable it to resist the Kremlin’s aggression.
The permanent freezing of Russian funds would be the first step to later be able to send the money to Volodymyr Zelensky’s government in the form of a “reparation loan”that kyiv should only return if Moscow compensates it for the destruction of the war.
The Orbán government, Vladimir Putin’s greatest ally within the EU and also aligned with Donald Trump’s thesesopposes Europe’s continued financial and military support for Ukraine.
For its part, Belgium has so far vetoed the “reparation loan”, fearing it could become a prime target for Kremlin retaliation, with most of the Russian funds being in the Brussels-based financial services company Euroclear.
Initially, the Commission Ursula von der Leyen had proposed approving both measures at the same time during the summit on December 18: the perpetual immobilization of Russian assets and the reparations loan. But EU governments decided to separate the two stages to isolate Hungary and thus increase pressure on Belgium.
The decision to accelerate from Brussels, put forward by the newspaper Financial Timesis also due to the intention of the North American government to appropriate Russian funds frozen in Europe.
In his 28-point peace plan, Trump proposes investing these assets in Washington’s efforts to rebuild Ukraine. The United States would receive 50% of the profits from this operation.
The EU agreed on February 28, 2022 to freeze the 210 billion assets of the Central Bank of Russia on community territory, as part of the third package of sanctions against the Kremlin for the war in Ukraine.
These sanctions are renewed every six months and their maintenance requires the unanimous support of the 27 Member States. Hungary has already repeatedly threatened to veto the renewal, although it has never done so. However, the release of Russian assets would immediately defeat the entire framework of reparations loans.
This is why the Community Executive proposed a regulation prohibiting indefinitely any transfer to Moscow of the fixed assets of the Central Bank of Russia.
The legal basis invoked by Brussels is Article 122 of the Treaty, an emergency clause which allows financial aid to be provided to Member States finding themselves in exceptional situations of economic difficulty, and whose activation only requires a qualified majority and not unanimity, thus circumventing Hungary’s veto.
“It is urgent to prevent the transfer of funds to Russia in order to limit the damage to the Union economy,” states the legislative proposal.
“In the absence of a ban on transferring the assets and reserves of the Central Bank of Russia, these resources will be used to support Russia’s war effort against Ukraine and its hybrid activities within the EU,” thus aggravating economic difficulties within the Union” says the regulation.
This is the regulation that EU governments plan to approve in the coming days (there is no set date yet) bypassing Budapest’s veto. “The negotiations are progressing, but I cannot go into details,” a second European diplomat explains to this newspaper.
As for Belgium, the President of the Commission, Ursula von der Leyenassures that his proposal already takes into account “most” of the concerns raised by his Prime Minister, Bart de Wever, who however still maintains his veto.
De Wever, who met von der Leyen and Chancellor Friedrich Merz last Friday, demands a joint guarantee from the rest of the member states to cover all frozen Russian funds and spread all associated risks.
“Belgium continues to be a country that wants to achieve a solution at European level, and a good solution. I don’t think this is the right solution. If a large number of countries want this repair loan, I made it clear on Friday to Ms Von der Leyen and Mr Merz that there were three crucial conditions,” De Wever declared this Wednesday in the Belgian Parliament.
“If these three conditions can be guaranteed before December 18, it is possible that we will agree. It is not in Belgium’s DNA to act like Hungary in Europe. But I remain skeptical”, warns the Belgian Prime Minister, also opposed to the use of article 122.
“This is the money of a country with which we are not at war… It would be like going into an embassy, removing all the furniture and selling it,” De Wever said.
Negotiations continue and the President of the European Council, Portugal’s António Costa, has already warned that next week’s summit could be extended indefinitely until there is white smoke.
“I am sure that we will make a decision on December 18. But, as I told my colleagues, if necessary, we will continue on December 19 or 20, until we reach a positive conclusion,” Costa said.
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