The European Commission still intends to present, “in the coming days” and perhaps early next week, a legislative proposal to continue funding Ukraine in 2026 and 2027, in line with the commitment made in late October by the European Council, excluding the Hungarian Prime Minister, Viktor Orbán (see EUROPE 13737/1).
On Friday 28 November, the spokesperson for the European Union institution, Paula Pinho, reported “intensive” discussions and work with all the Member States on the three options on the table: - bilateral loans; - a European loan backed by the EU budget; - a ‘Reparations Loan’ mobilising the assets of the Bank of Russia immobilised in the EU, mainly within Euroclear, the central securities depository based in Belgium (see EUROPE 13753/13).
See the note on the three financing options for Ukraine: https://aeur.eu/f/jh9
This would be a package containing a number of legislative texts involving various strands of the EU Council. The European Parliament is expected to be involved in certain cases, in particular if the European rules governing central securities depositories are amended. One of the issues at stake is the legal basis that the Commission will choose to work on, or not work on, as a matter of urgency.
“These are uncharted waters. So it’s legitimate to ask questions and to share concerns”, said Ms Pinho. She acknowledged receipt of a letter from the Belgian Prime Minister, Bart De Wever, reiterating and detailing his country’s concerns about the ‘Reparations Loan’, which Ukraine would only repay after Russia had paid reparations for the destruction caused by its military aggression.
In his letter, consulted by Agence Europe, Mr De Wever does not completely close the door on the ‘Reparations Loan’, which he nevertheless considers “fundamentally flawed”. But he warned against rushing into anything that could have a negative impact on the US-led negotiations to end the war. Hence the hypothesis, put forward by the leader, of a European bridging loan to cover Ukraine’s financing needs for 2026, estimated at €45 billion, in order to save time and avoid excessive exposure to financial risks.
The Prime Minister warned of the financial instability that could be caused by the ‘Reparations Loan’ because of investors’ fear of what they might see as an unprecedented confiscation and expropriation of sovereign assets. He sets out three essential conditions before giving his agreement at the European summit on 18 and 19 December:
(1) Participating EU countries will have to provide guarantees that are “legally binding, unconditional, irrevocable, on-demand, joint and several guarantees to the Union, based on the GNI key, to ensure that the Union is always able to repay the funds without receiving countervailing payments from Ukraine”.
They will have to bear the share of the guarantees that would fall to countries, such as Hungary, that would not participate in the future loan.
(2) In the event of a legal dispute initiated by the Russian authorities and based on the bilateral investment treaty between Belgium and Russia, the EU would have to assume any “financial liability” arising from a possible judgment.
In particular, the head of the Belgian government believes that Russia will target Euroclear’s assets, or those of its customers, located in Russia and in countries allied to Moscow.
(3) EU Member States and G7 countries holding Russian public assets will have to take part in the financial operation.
Belgium describes as a “pretext” the argument put forward by some countries, including France, that legal issues, such as the contractual links between the holders of Russian assets and the Bank of Russia, complicate their participation in the loan to Ukraine.
In addition, the involvement of countries outside the euro area, such as the United Kingdom and Canada, would make it possible to spread the financial risks. (Original version in French by Mathieu Bion)