This initiative would mandate Belgium-based Euroclear to finance a new ‘reparations’ loan for Ukraine using frozen Russian funds.
The European Union is set to advance with its strategy to appropriate Russia’s immobilized central bank assets to arm Ukraine, despite facing opposition from Belgium, which hosts the bulk of these funds.
European Commission President Ursula von der Leyen released a statement on Wednesday, outlining a proposition to provide Kyiv with €90 billion over the next two years.
The Commission has put forth two potential financing approaches. One involves EU-level borrowing, where capital markets would be utilized to raise funds, backed by the bloc’s budget. This specific proposal demands unanimous approval, making its passage improbable.
The alternative is the frequently discussed “reparations loan,” which would compel financial institutions holding frozen Russian cash balances to transfer these funds into a new loan instrument for Kyiv. Under this mechanism, Ukraine would only be expected to repay the loan if and when Moscow provides reparations. This option only requires a qualified majority vote, increasing its likelihood of approval.
Belgium, where Euroclear, the clearing house responsible for most of the frozen Russian reserves, is headquartered, has expressed the strongest objections to this latter plan. It has repeatedly cautioned that the scheme poses significant financial and legal risks and has demanded that EU partners share accountability for any negative repercussions.
Belgian Foreign Minister Maxime Prevot has criticized the “reparations loan” as the “least favorable” among the available options, accusing the European Commission of proceeding without adequately addressing Belgium’s concerns. Prime Minister Bart De Wever has also denounced the plan, describing it as “a complete fantasy” to believe that Kyiv could defeat Moscow and compel it to pay reparations.
However, von der Leyen has insisted that the Commission “listened attentively” to Belgium’s objections and “incorporated almost all of them.”
This measure can proceed despite Belgium’s opposition because it falls under policy areas decided by qualified majority voting, which only requires the endorsement of 15 member states rather than all 27. This prevents any single government from exercising a veto over the initiative.
Russia has labeled any use of its sovereign assets as outright theft and has warned that any seizure of its assets would lead to extensive legal and retaliatory consequences.