Belgium ‘sceptical but constructive’ about new EU plan for frozen Russian assets
Belgium remains “sceptical” about the European Commission's new plan to provide Ukraine with a “reparations loan” using frozen Russian assets, a European source told Belga. Although the proposal does not yet address Belgium's concerns, Belgium is willing to take a “constructive” approach.
In the G7, nearly 300 billion euros in Russian central bank assets have been frozen as part of the Russian sanctions due to the war in Ukraine. Two-thirds of these assets are stored in the EU, the vast majority of which are held by the Brussels-based financial services company Euroclear.
In March, European heads of state and government leaders confirmed that Russian assets would remain frozen until Russia ended its war against Ukraine and compensated Kyiv for the damage caused. But in the meantime, Ukraine's financial needs are increasing, while uncertainty about US support is growing.
European Commission president Ursula von der Leyen therefore proposed two weeks ago to use the cash resources linked to the assets for a “reparations loan” for Ukraine. The idea is not to touch the assets themselves, to avoid the legal risks of seizing sovereign assets, and to have the member states bear the risk collectively. Ukraine would only have to repay the loan once Russia has compensated for the war damage.
On Thursday evening, German chancellor Friedrich Merz expressed his support for such a solution, for a loan of 140 billion euros to Kyiv. The proposal was discussed on Friday by the ambassadors of the member states and will be on the negotiating table at the informal European summit in Copenhagen next week and probably again at the EU summit at the end of October.
Last night in New York, prime minister Bart De Wever was very critical of Merz's statements. From the outset, Belgium has pointed out the risks of seizing the money, both for the reputation and stability of the euro and for Euroclear, and has insisted on the need to share the risks. The Commission, on the other hand, says that its proposal does not amount to confiscation.
Another factor is that in the first half of this year, Belgium collected 650 million euros in corporation tax on the interest and dividends that Euroclear earned on the assets. The government thus collects an average of 1.3 billion euros annually, which it spends on aid to Ukraine and defence. It is not yet clear what will happen to this tax revenue in the Commission's proposal.
Within the EU, there is also the idea of alleviating the impact on Belgium by offering more budgetary flexibility, according to a source. By paying out the 140 billion euros loan in instalments, the money would remain with Euroclear for some time, thereby still generating tax revenue.
Euroclear's headquarters in Brussels © PHOTO BELGIAN_FREELANCE
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