The European Commission is set to propose a legal initiative this week to utilize frozen Russian assets to support Ukraine. The plan may involve leveraging these assets directly or potentially exploring options like accessing financial markets. This move comes after EU leaders agreed in October to address Ukraine’s immediate financial requirements for the next two years. However, concerns raised by Belgium led to a pause in endorsing a specific proposal to use 140 billion euros ($162 billion) of frozen Russian assets in Europe as a loan for Kyiv.
A significant portion of the frozen Russian assets in Europe is held in accounts managed by Belgian securities depository Euroclear. The Belgian government has consistently expressed apprehensions regarding potential legal complexities associated with this approach. According to the Commission’s proposal, Ukraine would be obligated to repay the loan only if Russia compensates for the damages resulting from its conflict with Ukraine.
The European Union’s executive body is anticipated to approve the proposal on Wednesday, highlighting a preferred strategy involving a reparations loan tied to Russia’s immobilized central bank assets. The proposal also leaves room for the consideration of a loan supported by EU borrowing from financial markets, with flexibility to switch between the two options as needed, as per insider sources.
When asked about the details of the proposed plan, a European Commission spokesperson refrained from providing specifics but mentioned that the financing options for Ukraine would be deliberated during the weekly meeting of the commissioners. The adoption of the respective legal proposals is scheduled for the near future.