EU leaders gather to discuss a massive loan to Ukraine

BRUSSELS – European Union leaders are meeting to discuss a significant loan for Ukraine, but the proposal faces hurdles. Belgium is seeking guarantees of protection from potential Russian retaliation before it agrees to back the financial aid package. Ukrainian President Volodymyr Zelenskyy has urged the EU to make a decision promptly to ensure Ukraine's financial stability in the coming year.

The 27-nation bloc is considering using tens of billions of euros in frozen Russian assets to secure a loan aimed at covering Ukraine's military and financial needs for the next two years. These assets, largely held at the Brussels-based financial clearing house Euroclear, totaled approximately 193 billion euros ($227 billion) as of September. Russia's Central Bank recently filed a lawsuit against Euroclear.

Belgian Prime Minister Bart De Wever, addressing his parliament before the summit, emphasized the need for reassurance. "Give me a parachute and we'll all jump together," he stated, expressing confidence if adequate safeguards are in place.

Belgium's concerns stem from fears of Russian countermeasures. The country prefers the EU to borrow the funds on international markets and wants other nations holding frozen Russian assets to contribute. Furthermore, Belgium seeks guarantees that Euroclear will be financially protected against legal challenges.

European officials have acknowledged Russia's ongoing efforts to disrupt and sabotage activities across the continent, with the Central Bank lawsuit adding pressure on Belgium and its EU partners ahead of the summit.

The proposed "reparations loan" would provide Ukraine with 90 billion euros ($106 billion), with countries like the U.K., Canada, and Norway potentially covering any shortfall. While Russia would retain its claim to the assets, they would remain inaccessible until Russia ends its war in Ukraine and compensates for the damages caused.

Despite the European Commission's efforts to incorporate safeguards for Belgium into the loan plan, Prime Minister De Wever remains unconvinced. He stated that he had not yet seen a satisfactory proposal addressing Belgium's concerns but hoped for progress during the summit. He affirmed Belgium's commitment to supporting Ukraine.

President Zelenskyy met with Prime Minister De Wever in Brussels to advocate for the release of the frozen funds. He emphasized that Ukraine urgently needs financial assistance by spring to avoid potential bankruptcy.

Zelenskyy argued that Ukraine has a legitimate right to these funds, given Russia's destruction of the country, and that using these assets to counter Russian attacks is just. Appealing to Belgian citizens concerned about retaliation, Zelenskyy stated that potential legal challenges from Russia are less daunting than the threat of Russian forces at Ukraine's borders. He urged Europe to help Ukraine defend itself.

EU leaders have pledged to meet Ukraine's financial needs through 2027, which the International Monetary Fund estimates will require 137 billion euros ($160 billion). European Commission President Ursula von der Leyen stressed the urgency of finding a solution, while EU Council President António Costa committed to continued negotiations until an agreement is reached.

Polish Prime Minister Donald Tusk framed the decision as a choice between providing financial aid now or facing greater consequences in the future. EU envoys have been working to resolve differences among member states, but the plan could be blocked if enough countries object, as there is currently no majority support for raising funds on international markets.

German Chancellor Friedrich Merz expressed hope that Belgium's concerns could be addressed, stating that using Russian assets for Ukraine is the only viable option. Hungary and Slovakia oppose the loan plan, while Bulgaria, Italy, and Malta, along with Belgium, remain undecided. Hungarian Prime Minister Viktor Orbán, a close ally of Russian President Vladimir Putin, opposes the loan, arguing that providing funds equates to supporting war and describing the plan as a "dead end."

The summit's outcome carries significant implications for Europe's role in future negotiations to end the war. The United States seeks reassurance that European nations are committed to financially and militarily supporting Ukraine. The loan plan also presents challenges to the EU's decision-making processes, particularly if a qualified majority imposes the scheme on Belgium, potentially impacting future consensus-building within the bloc.

Prime Minister De Wever faces the challenge of balancing his concerns with the potential damage to his government's credibility in Europe if he opposes the majority. Regardless of the summit's outcome, legal experts will need to translate any political agreement into a workable plan, and some national parliaments may need to approve the loan before funds can be disbursed to Ukraine.