Recent discussions within the European Union (EU) reveal two proposals aimed at securing €90 billion to support Ukraine’s financial needs. This funding is intended to cover approximately two-thirds of Ukraine’s estimated funding requirements.
EU Funding Proposals for Ukraine
The first proposal involves raising funds on capital markets, supported by a guarantee from the EU budget. This option, favored by Belgium, faces challenges due to Hungary and Slovakia’s objections to military funding for Ukraine.
The second proposal suggests loaning cash to Ukraine from assets previously held by Russia. These assets, originally in securities, have matured into cash and are now part of Euroclear, under the management of the European Central Bank.
Concerns Raised by Belgium
Belgium has expressed valid concerns regarding the potential risks involved in loaning these funds. In response, the European Commission reassured Belgium that adequate measures have been taken to mitigate these risks.
- Belgium would receive a guarantee covering all €210 billion of Russian assets located within the EU.
- If Euroclear experiences any losses related to Russian assets, those would be compensated using funds from Russia’s clearing house assets in the EU.
- A ruling from a Russian court targeting Belgium would not be recognized within the EU framework.
Indefinite Immobilization of Russian Assets
A significant development is anticipated as EU ambassadors plan to agree on an indefinite immobilization of Russia’s central bank assets located in Europe. Previously, these assets required a unanimous vote every six months for continued freezing, posing ongoing risks for Belgium.
This new decision will invoke an emergency clause under Article 122 of the EU Treaties. The clause permits assets to remain frozen as long as there is an ongoing “immediate threat to the economic interests of the union.”
These proposals and developments signify a critical moment in the EU’s response to the ongoing conflict in Ukraine. The financial strategies revealed here demonstrate both a commitment to support Ukraine and the complexity of managing international relations under such pressing circumstances.
