- The European Commission proposed a loan to Ukraine in the amount of 140 billion euros.
- The loan will be financed from frozen Russian assets.
- Belgium expressed concern about the legal and financial consequences.
The European Commission (EC) offered significant guarantees for its €140 billion loan to Ukraine, financed by frozen Russian assets, to appease Belgium. It is afraid that it will bear the negative consequences of this move, that is, that it will have to return this money to Russia one day, and it is also afraid of losing the confidence of foreign investors. TASR informs about it according to a report by the Politico portal.
EC President Ursula von der Leyen said in a letter to the 27 EU member states sent on Monday that euro bloc countries are prepared to bear the risks of Russian retaliation in the coming years.
Belgium and the risks of Russia
In another concession to Belgian Prime Minister Bart De Wever, the EC said EU countries would bear the risks “even after the asset freeze is lifted.” Politico notes that De Wever is seeking financial guarantees from the rest of the bloc to protect himself from Kremlin lawyers who could demand that he return the money to Moscow. This is a problem for Belgium, as it has signed a bilateral investment treaty with Russia. Most of Russia’s assets – around 200 billion euros – are held in the Brussels-based Euroclear depository.
“The guarantees would also cover risks arising from bilateral investment treaties that are linked to the freezing of Russian state assets,” von der Leyen said.
Financing alternatives
The mentioned document contains two other financing options that need to be considered if Russian assets will not be used to finance the loan. In both cases, the EU would pay out of its own pocket to support Ukraine.
AFP, which also looked into the aforementioned letter, informs that the first proposed option is for the member states to guarantee subsidies for Ukraine and use the free space in the central EU budget to cover them. The second is joint borrowing of these funds.
Ukraine needs help
“It is clear that there are no easy solutions. However, this also reflects the scale of the challenge and the historical nature of the obligations facing Europe at this historical moment for Ukraine,” the aforementioned letter continued.
According to Leyen, Ukraine will need more than 70 billion euros of additional financial aid in order to defend itself next year and keep the government running during the ongoing war with Russia. Referring to the forecasts of the International Monetary Fund, which assume that Russia’s war in Ukraine will end by the end of next year, Leyen said that the need for aid for Kyiv will reach more than 70 billion euros in 2026 and 64 billion euros in 2027.
