The biggest pain points for EU leaders at critical Ukraine summit

As the European Council convenes in Brussels on Thursday, leaders face a critical juncture to prove the EU's effectiveness amid growing global challenges. With a widening rift with the U.S. and Ukraine's looming financial crisis, the summit's success hinges on overcoming national divisions to deliver tangible solutions.

A primary challenge is securing Belgium's agreement to redirect billions in frozen Russian assets to support Ukraine's economy. German Chancellor Friedrich Merz has warned of severe consequences for the EU if this plan fails.

The crucial €210 Billion Question

EU leaders are under pressure to approve a proposal to leverage €210 billion in frozen Russian assets to provide a loan to Ukraine. This follows unsuccessful attempts to reach an agreement during the previous European Council in October and subsequent urgent talks.

Belgium's support is essential because the majority of these frozen assets are held by Euroclear, a financial depository based in Brussels. The Belgian government is concerned about potential legal repercussions or retaliation from Moscow.

Despite ongoing efforts to persuade him, Belgian Prime Minister Bart De Wever has remained firm in his opposition, maintaining strong domestic backing. Just before the summit, the Belgian ambassador indicated a lack of progress during private discussions. Italy, Bulgaria, and Malta have also voiced their opposition.

This situation poses a significant threat to Ukraine, which faces a €71.7 billion budget shortfall next year, potentially leading to public spending cuts starting in April.

Could Belgium Be Sidelined?

To overcome Belgium's resistance, some member states, including Germany and Latvia, have suggested using qualified majority voting to approve the asset seizure, which would bypass the need for unanimous consent. This would require 15 out of 27 member states to vote in favor.

That said, the reality is a bit more complicated. Belgian officials have stated that attempting to override their concerns would be futile, as the funds held in Euroclear would not be released without their cooperation.

A senior EU official emphasized that the primary goal of the summit is to persuade Belgium to withdraw its opposition, even if it requires extensive negotiations.

Alternative Funding Options

If an agreement on the assets cannot be reached, the EU will need to identify alternative methods to support Ukraine, as pledged during the October summit.

While European leaders have expressed differing views on how to fund Kyiv, initial discussions have explored potential compromises. European Commission President Ursula von der Leyen has suggested the possibility of joint debt, backed by the EU's next seven-year budget, as a backup plan.

Under such a plan, Hungary and Slovakia, which oppose further aid to Ukraine, could be excluded from the joint debt scheme. This would allow the remaining 25 EU countries to participate in the funding arrangement.

Negotiations for Peace

Following Washington's proposal for ending the war, which involved significant concessions to Russia, Ukraine and its allies advocated for an alternative plan. This plan includes an offer from American officials to provide Ukraine with NATO-style security assurances.

Friedrich Merz stated that a ceasefire is now conceivable for the first time since 2022. Ukrainian President Volodymyr Zelenskyy is expected to attend the summit to provide updates on the negotiation progress.

U.S. and Russian officials are scheduled to meet in Miami to continue discussions. The EU is expected to commit to providing "robust and credible security guarantees for Ukraine," while also asserting its autonomy in matters affecting its security.

Enhancing EU Competitiveness

Amid efforts to revitalize the EU economy, discussions will focus on how external pressures from the U.S. and China are impacting the bloc's competitiveness.

The draft conclusions indicate that EU leaders held a strategic discussion on the geoeconomic situation and its implications for the EU's competitiveness. Leaders are expected to address the challenges posed by U.S. trade policies and China's export controls.

The Mercosur Trade Deal

The Mercosur trade deal, which aims to establish a vast free trade zone with South American countries, is not officially on the agenda. That said, the reality is a bit more complicated. France and Italy are seeking to postpone a vote on the deal due to concerns about agricultural safeguards. Denmark, currently holding the Council of the EU presidency, intends to hold the vote in time for von der Leyen to sign the deal in Brazil on December 20. Although not scheduled for discussion, the issue may still arise during the leaders' meeting.