The German Chancellor Friedrich Merzand the president of the European Commission, Ursula von der Leyen, meet this Friday in Brussels with Belgian Prime Minister Bart de Weverto try to convince him to agree to the European Union (EU) use frozen Russian assets to finance Ukraine the next two years.
EU leaders committed last October to bear kyiv’s expenses to confront Russia’s aggression. The problem is that money is running out and fewer and fewer governments are willing to let their taxpayers bear the costs of a conflict that has been going on for three years, and for which they are responsible. Russian President Vladimir Putin.
Von der Leyen put two options on the table last Wednesday. The first, issue joint debt using the budget community as a guarantee. The second, use the liquidity generated by the Russian assets frozen through sanctions to give a loan to kyiv, which it would only have to repay if the Kremlin assumes the cost of the destruction it has caused.
The first option requires unanimity. With Hungary’s opposition, an agreement is almost impossible. The second only requires a large majority. The problem is that most of those assets are in the hands of Eurocleara company based in Brussels. To the Belgian Government He is not convinced by Von der Leyen’s planand the rest of the leaders are wary of moving forward without Bart de Wever’s approval.
emergency summit
That’s why Merz has changed his schedule. The German Chancellor I had to travel to Norway this Fridaybut has considered it more urgent to find a way out of the financing blockade for Ukraine. The European Council meets in two weeks and must give political approval to one of the options so that the Commission starts the legislative process and the money arrives on time.
At the German’s proposal, the chancellor, the Belgian prime minister and Von der Leyen will meet this Friday in Brussels. A senior community source acknowledged last Wednesday that They had already gone “very far” to allay Belgium’s fears. However, for Bart de Wever it is not enough.
“We are willing to make sacrifices, but “You cannot ask this country to do the impossible.”assured De Wever during a speech in the Belgian federal Parliament. For the prime minister, the problem is that the compensation “for illegal expropriation” What Russia could ask for could be higher than the frozen assets. “Belgium will never agree to assume the risks of this operation alone,” the prime minister insisted.
Systemic risk
Of the 210 billion euros in Russian assets frozen in Europe, 185,000 million are in the hands of Euroclearan international securities depository. That is, custody of assets on behalf of third parties and, coincidentally, It was the warehouse where Russia kept much of its money before the war.
Under normal conditions, when securities mature and are converted into cash, Euroclear returns that money to the third party in question. The sanctions prevent it and What the Commission proposes is to use part of that money to give a loan to Ukraine worth 90,000 million euros.
In her proposal last Wednesday, Von der Leyen proposed that this loan be backed by national guarantees. That way, if for some reason the assets were no longer frozen and had to be returned, the money would be available immediately to do it. Furthermore, he proposed make it illegal to return those assets considering that the war in Ukraine represents not only a violation of international law but also a serious distortion for the European economy.
However, Urbain Valley, the CEO ofin an interview with Belgian television, considers that this proposal “as it is today, is not realistic.” Urbain has warned of the risk of an operation like this given Euroclear’s systemic role in financial markets. “Any questioning of trust in the market infrastructure we represent could absolutely destabilize the financial health of our countriesbut also at a global level,” he said.
According to the spokesperson for the European Commission, Paula Pinhothe objective of the meeting is precisely to discuss last Wednesday’s proposal. Also directly address the doubts that Belgium continues to raise about it. Pinho has not clarified whether Von der Leyen will put new measures on the table to convince Bart de Wever.
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