EU Faces Key Summit on Using Russian Assets for Ukraine

December 18 ------ EU leaders are under pressure to hammer out how to keep financing Ukraine at a summit starting Thursday – with key player Belgium resisting a push to use frozen Russian assets.   

Here is what’s at stake during a crucial week for the 27-nation bloc:

Keeping Ukraine afloat

The European Union is scrambling for ways to keep funding flowing to Ukraine as the war-wracked country faces yawning shortfalls four years into Russia’s invasion. While the United States forges ahead with its efforts to stop the war, Kyiv’s closest backers see making sure Ukraine can stay afloat as vital. That is a mammoth task: Brussels estimates that Kyiv will need an extra €135 billion ($160 billion) to cover its military and government budget over the next two years.

What’s the EU proposing?

In a bid to plug the gap, the European Commission has put forward a complex scheme to use some €200 billion of Russian central bank assets frozen in the bloc to generate a loan for Ukraine. The financial maneuver would see Belgium-based deposit organization Euroclear, where the vast bulk of the assets are held, lend funds to the EU, which would then lend them to Ukraine. The money would only be paid back by Kyiv once Moscow compensates it for the damage it has wrought.

The EU’s executive wants to provide an initial €90 billion to Ukraine over the next two years – and says international partners should chip in the rest. But while the plan has the strong backing of many member states, including heavyweight Germany, it has drawn fierce opposition so far from Belgium.

The Belgian government fears it could be left facing crippling legal and financial reprisals from Moscow, and has demanded watertight guarantees that other EU countries will share the risk. The commission has laid out what it says is a “three-tier defense” to shield Belgium and Euroclear, but that so far has not broken resistance. Russia’s central bank, meanwhile, fired a shot across the bow last week by saying it was suing Euroclear. 

Source: kyivpost.com