The European Union must continue to fund Ukraine while increasing pressure on Russia at a crucial moment in the negotiations. And so Brussels made its offer this Wednesday – after weeks of coming and going – His proposal to use frozen Russian assets for financing Of aid to Kyiv, and it did so, yes, as a two-way street. The other is to generate a common debt on the union itself and the goal, in any case, is Coverage 90,000 million Euros to support Ukraine for the years 2026 and 2027.
European Commission President Ursula von der Leyen explained in a press conference that this would generally represent two-thirds of Kiev’s needs, given that the International Monetary Fund Estimates indicate that the invaded country will need 135 billion euros over the next two years. “This is necessary to maintain the functioning of the state and basic services, hence the civilian part, but also to continue allowing courageous resistance on the Ukrainian battlefield, that is, the military part,” the German said.
There he continued, explaining the purpose of the frozen Russian assets: The system – called the reparations loan – will include the use of those frozen assets, and includes all institutions that now own them, through the announced mechanism; The entities will therefore move it to the instrument proposed by the European Commission. Once there, the money will go to Ukraine and Kyiv will have to return the amounts. Once Russia pays reparationsVon der Leyen stated. European Commissioner for the Economy Vladis Dombrovskis added: “Our proposals are consistent with international law, increase pressure on Russia and send a clear message that its aggression will not win.”
How will that money be used? “First of all, we will use the funds to support the Ukrainian budget, and here we will build on the success of existing instruments, such as the Macro-Financial Assistance or the Ukraine Facility,” the head of the executive branch of the community answered. Moreover, these amounts It will go to military reinforcements, with priority given to purchasing materials in Ukraine and EU countries Or the European Economic Area. The Commission clarifies that these funds can be used for purchases abroad only in cases of urgent needs. This path for the frozen Russian assets must be approved by the Council by a qualified majority.
This makes sense to some extent: Belgium continues to be strongly critical of the Commission’s proposal, as its Foreign Minister expressed on Wednesday. He had said from NATO headquarters, “We have a frustrating feeling that no one heard us. Our concerns have been downplayed and the text presented by the committee does not address our concerns satisfactorily.” “We also had an extensive discussion on Belgium’s positionWhere Euroclear is located, the main source. “We listened very carefully to Belgium’s concerns and took almost all of them into account,” von der Leyen said.
Belgium is the member state More exposed to banking risks due to hosting the larger amount (through the Euroclear entity, approximately 62% of the total); France also has a percentage and another good portion is in the UK, which is not a member of the EU. Thus, the Commission promised a series of guarantees so that the partners could “protect” each other when disposing of Russian assets. “We have created a very strong solidarity mechanism in which the Union can eventually intervene because we want to guarantee, for all our member states, but also for Belgium specifically, that one thing is certain: we will share the burden fairly,” the German concluded.
Reel lace in committee proposal
Community sources explained this Russia has a legal obligation to pay compensation To invade Ukraine and that it is the European Union that will place a loan of these amounts in the hands of Kyiv. The European Union will finance this loan by borrowing cash balances linked to Russian assets restricted in financial institutions, without prejudice to Russia’s claim to these institutions. The sources added that before the war, the Central Securities Depository (CSD) and other institutions held bonds and other securities on behalf of the Central Bank of Russia. When those securities matured, they were converted into cash that, due to sanctions, could not be transferred to Russia and thus accumulated in these institutions.
now, The total Russian sovereign assets restricted in the European Union amount to 210 billion euros They expressed this (185,000 million in the Center for Sustainable Development and 25,000 million in other institutions). Of this amount in the CSD, $45,000 million must be held in reserve to cover outstanding loans, so up to $165,000 million will be available for new loans. The sources also explained that the member state guarantees will include a liquidity mechanism that will allow the country in question, when activated, to contribute money to the EU budget or for the EU itself to give it a loan and in this way the funds remain available in the Commission on Sustainable Development.
The second way other than frozen Russian assets is through European Union debt.Which mainly consists of raising capital on capital markets and using the EU budget as collateral They explained from Brussels that this solution must be achieved unanimously, in contrast to the formula of the people restricted in the Kremlin.
The Commission’s message is directed to Russia in the midst of peace negotiations with this step, which still has to pass the 27th candidate – and the European Parliament -. “We are sending a very strong signal to the Ukrainian people that we are committed for the long term,” he added. We can provide them with the means to defend themselves and, more importantly, the means to lead peace negotiations. From a position of strength. The message to Russia is that a reparations loan or borrowing from the European Union, which is one of the two solutions, increases the cost of the war and invites Putin to come to the negotiating table to finally find peace.