Los leaders of the European Union (EU) They meet this Thursday in Brussels with a long agenda, but a single decision on the table: agree on what instrument they will use to guarantee financial aid to Ukraine for the next two years, with the credibility of the bloc at stake.
According to calculations by the European Commission, Ukraine needs about 53 billion euros in budget assistance and about 80 billion in military support for the next two years. Last October, EU leaders committed to pay the bill or, at least, part. They will take care of about 90,000 million.
However, two months later, The Twenty-seven remain divided on how to do it. This Thursday, they will have to reach an agreement. “If we don’t succeed, heThe European Union’s ability to act will be seriously damaged for years,” the German Chancellor warned last Monday in Berlin Friedrich Merzwho participated in the peace negotiations for Ukraine. The president Volodímir Zelenski will participate in the summit in Brussels.
One and a half options
The Commission put two options on the table two weeks ago. The first would be to use the budget as a guarantee for issue joint debt. That option requires unanimity. Hungary opposes any type of financing to Ukrainewhich makes it impossible. Although a diplomatic source has hinted that formulas could be sought to allow its approval by majoritythis option has been left aside. At the same time, many countries believe that Russia should pay for what was destroyed.
The second option would be use the 210 billion euros in frozen Russian assets due to sanctions against the Kremlin in the EU. Brussels proposes use liquidity generated by them to give a loan to Ukrainewhich would only have to be returned if Russia ends up paying for the damage caused during the war.
Legally, This second option could be approved by a qualified majoritythat is, 17 countries that represent at least 65% of the European population. Politically, seems unviable without the support of the country that houses a good part of these assets and which, until now, has opposed: Belgium. All efforts in recent weeks have been put into give sufficient guarantees to the Belgian government to give approval.
Belgium’s requests
Of the 210,000 assets frozen in the EU, 175 billion are under the control of Euroclear, a warehouse based in Belgium. As an international securities depository, Euroclear custody assets on behalf of third parties, in this case, the Central Bank of Russia, which were frozen by sanctions at the start of the war. The Commission wants use the cash you have generated by being immobilized to finance Ukraine, by understanding that it must be the Kremlin who pays.
Brussels claims that This is not a confiscation.illegal under international law. The Belgian Government has serious doubts about its legality and considers that the risk to the financial system is significant. That is why it demands, on the one hand, that not only Euroclear’s assets but all of them, including those of private banks, be made available to the EU, and on the other, that European governments give guarantees to Belgium in case of claims. Those two questions, in addition to the financing method, will be at the heart of the discussions.
Belgium wants indefinite and unlimited guarantees to address the financial risk of using the assets, such as legal claims or confiscations on Russian territory. A few days ago, it started a procedure in a Moscow court for an amount greater than that held by Euroclear. The decision of the European governments last week ban asset transfers to Russia While the war lasts, through an instrument intended for crises, it makes it less feasible for these cases to prosper. However, according to diplomatic sources, Belgium would be demanding that the guarantees provided by the countries in the event that it occurs be higher than the nominal value of the loan.
In practice, this means that European governments would have to advance more money than will be necessary to help Ukraine, in case there are claims. Although the majority is willing to give guaranteesunderstand that there has to be a limit. This will be one of the hot points of the negotiation.
The decisions will be purely European, but in practice, What the rest of the allies do will influence the discussion. Belgium wants G7 countries also make use of the assets to finance Ukraine if they have to. Some, like the United Kingdom, have shown willingness to explore this option. Others, like Japanthey refuse.
Now or never
The leaders they negotiate against the clock because any of the options requires a legislative process which will last for several weeks. The money would not be available overnight., but the decision of the European Council is necessary for this work to begin. Furthermore, the plans of other financial institutions such as the International Monetary Fundor even private investors, depend largely on what major donors do.
The EU finds itself facing a complex dilemma and its credibility is at stake. If you choose to use Russian assets, you will need to ensure that the legal proposal is sufficiently solidespecially if it goes ahead without Belgian backing. If you don’t get an agreement, The financial stability that would be at stake is that of kyivin the midst of peace negotiations with Russia.
The Belgian Prime Minister, Bart de Wever, will appear before his federal Parliament before addressing the summit. The president of Ukraine, Volodymyr Zelensky will sit at the leaders’ table in Brussels. The pressure continues to grow. Diplomatic sources acknowledge that it is difficult to know how the game will end, that the leaders will have the last word. What community sources insisted on is that, this time, the Twenty-Seven They will not leave the table until there is an agreement to keep Ukraine afloat.
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